growth stock

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Growth stock

Common stock of a company that has an opportunity to invest money and earn more than the opportunity cost of capital.

Growth Stock

Share in a company performing better, or expected to perform better, than its industry or the market as a whole. Shares generating a return on equity of greater than 15% are generally classified as growth stocks, but not all growth stocks are classified as such. Such stocks usually pay little to nothing dividends as the companies reinvest most of their earnings. Some believe that many or most growth stocks are overvalued, citing for example the large number of growth stocks during the dotcom bubble.

growth stock

The stock of a firm that is expected to have above-average increases in revenues and earnings. These firms usually retain most earnings for reinvestment and therefore pay small dividends. The stock, often selling at relatively high price-earnings ratios, is subject to wide swings in price. Examples include Intel, General Electric, and Dell.
References in periodicals archive ?
Some investors are seeking safety in domestic US growth stocks ranging from software and online advertising to aerospace and recruitment since President Donald Trump's May 5 tweets showed that US talks with China were in trouble.
Indeed, the first decade of the new century reversed the Dot Com trend and resulted in large-cap growth stocks losing 4 percent annually over the ten-year period.
"Growth stocks typically do poorly in situations of global growth decelerating," he said.
The risk in buying a given growth stock is that its lofty price could fall sharply on any negative news about the company, particularly if earnings disappoint.
For his growth stock, he invested in Universal Robina Corp.
Growth stocks are attractive because they offer a higher potential return, but the downside is they also offer more risk.
Prior to TIPRA, a common strategy was to invest in instruments that generate low (or no) income, such as growth stocks or savings bonds.
I investigate the mean reversion tendency of small growth stocks. Using a carefully articulated research design employing established and empirically tested principles, my findings should support or refute the anecdotal evidence that small growth stocks make superior investments.
"Whether it's growth stocks, value stocks, momentum stocks, stocks benefiting from emerging growth in China or our stock-of-the-month report, each product is represented with its own distinct marketing message.
Campbell, Polk, and Vuolteenaho show that growth stocks' cash flows are particularly sensitive to temporary movements in aggregate stock prices (driven by movements in the equity risk premium), while value stocks' cash flow's are particularly sensitive to permanent movements in aggregate stock prices (driven by market-wide shocks to cash flows.) Thus the high betas of growth stocks with the market's discount-rate shocks, and of value stocks with the market's cash-flow shocks, are determined by the cash flow fundamentals of growth and value companies.
Paper company stock prices lagged the Dow Jones average by wide margins, the industry failed to earn its cost of capital, and the industry practically vanished from Wall Street radar screens, replaced by exciting, dynamic growth stocks in industries such as energy trading, telecommunications, and wireless.
Investment specialists typically advise those who are interested in capital gains and future growth of earnings to invest in growth stocks rather than value stocks.