What Is Growth Stock? Meaning & Example
Definition
A growth stock belongs to a company expected to increase revenue and earnings faster than average. Investors often pay higher valuations for that potential.
Related terms
A value stock trades at a low price relative to measures like earnings, book value or cash flow. Investors buy them hoping the market will eventually recognize their worth.
P/E RatioThe price-to-earnings ratio divides a company's share price by its earnings per share. It shows how much investors pay for each dollar of profit.
VolatilityVolatility measures how much and how quickly prices move. Higher volatility means bigger swings, which bring both more opportunity and more risk.
What is Growth Stock?
A growth stock belongs to a company expected to increase revenue and earnings faster than average. Investors often pay higher valuations for that potential.
Can you give an example of Growth Stock?
A software company growing sales 30% a year and reinvesting profits instead of paying dividends is a typical growth stock.