Growth stocks - Stocks whose earnings have grown at an above average rate over a number of years and which are expected to continue to grow at a high rate for some time to come.Growth stocks usually trade on higher P/E ratios than non growth stocks, but their share prices also tend to be more volatile, which means they are inherently more risky than other stocks. If their growth falters, the market may punish them by marking down the share price severely.Because their primary attraction is capital growth, growth stock companies are often not expected to pay dividends. The reasoning is that the shareholders are better served by the money being invested back into the company. This is fine if the company delivers on its growth promises, as increases in earnings will, if the P/E stays the same, result in higher share prices. But if the company fails to deliver on its promises, investors will not only miss out on the capital appreciation they expect, but won"t even have dividend income to compensate.
Growth stocks : stocks whose earnings have grown at an above average rate over a number of years and which are expected to continue to grow at a high rate for some time to come.growth stocks usually trade on higher p/e ratios than non growth stocks, but their share prices also tend to be more volatile, which means they are inherently more risky than other stocks. if their growth falters, the market may punish them by marking down the share price severely.because their primary attraction is capital growth, growth stock companies are often not expected to pay dividends. the reasoning is that the shareholders are better served by the money being invested back into the company. this is fine if the company delivers on its growth promises, as increases in earnings will, if the p/e stays the same, result in higher share prices. but if the company fails to deliver on its promises, investors will not only miss out on the capital appreciation they expect, but won"t even have dividend income to compensate.
Growth stocks