performance stock(redirected from Performance Stocks)
A stock that is undergoing, or is likely to undergo, significant price appreciation. Performance stocks generally do not pay dividends because their companies reinvest all earnings toward further growth. Some investors seek out performance stocks because of the potential for high profit in a short period of time. They tend to have high price-earnings ratios. However, the term has a connotation referring to a stock that is fundamentally strong, as opposed to a hot stock, which does not have this connotation.
A stock that investors believe has an excellent chance for significant price appreciation. Performance stock tends to be issued by growth-oriented firms that retain most or all income for reinvestment. The stock usually sells at above-average price-earnings ratios and experiences large price swings. Performance stock is judged more on the basis of fundamental analysis than are glamour stock and hot stock, which are more subject to investor psychology.