Growth investing targets stocks that are:

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Prepare for the Investment SAE Test. Utilize flashcards and multiple choice questions, each with hints and explanations. Ace your exam!

Growth investing is an investment strategy that focuses on companies expected to grow at an above-average rate compared to other companies in the market or within their industry. This approach is driven by the belief that companies with strong growth potential will increase their earnings and, consequently, their stock prices, providing significant returns to investors.

Investors in growth stocks look for companies that exhibit characteristics such as expanding markets, innovative products or services, and strong sales and revenue growth. The appeal of growth investing lies in the potential for capital appreciation, especially in the long term, as these companies often reinvest profits to fuel further growth rather than paying dividends.

By targeting stocks predicted to grow at an above-average rate, growth investors are leveraging the potential for substantial increases in share value, which aligns directly with their investment goals. This strategy contrasts with more value-oriented approaches that focus on identifying undervalued stocks based on metrics like intrinsic value.

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