Stock Market Investors » Glossary of Stock Terms » What is a Growth Stock?

What is a Growth Stock?

Growth stocks are generally issued by companies that manage to grow their earnings and revenues at a faster rate than the average typical for the industry in which they operate. Unfortunately, growth companies rarely pay dividends, since they need the generated resources for the financing of their further development and growth.

Growth stocks are preferred by investors that foresee that the price of the company's stock will rise in the long-term thanks to its growth.

Growth investors tend to concentrate their efforts in discerning stocks that present good potential for greater growth as compared to the other stocks on the market or to the stocks that are in the same industry. If you manage to develop your growth discerning skills and find such companies, over the long term you will enjoy high profits that are caused by the increase in the value of the company.

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