Growth stocks belong to companies which are expected to grow at a faster pace than others. Investors expect growth stocks or growth companies to show continuous and strong growth in profits, revenues and cash flows. These companies generally have little or no competition.
Features of Growth stocks
Some features of Growth stocks are: 1. Growth stocks are expected to show extraordinary growth in future. 2. Their growth potential attracts more investors, even at higher share prices. 3. They mostly invest their profits and earnings for capital expansion. 4. Growth stocks have a high ‘P/E’ multiple and are considered to be ‘expensive’ when compared with other stocks from the peer group.