As an investor, it makes sense to consider the value of putting money into growth stocks. After all, growth stocks represent equity in companies that are expected to outpace their peers in earnings and stock performance.
While these stocks don’t usually pay a dividend, the capital appreciation returns can be exponential. Over time, as growth companies mature, they may decide to start paying dividends.
Five characteristics to look for in a potential growth stock investment are:
A strong leadership team
An industry poised for growth
Commanding market share
Strong sales growth
A large target market
Growth companies are expected to have earnings and stock performances that outpace their peers.
Growth stocks provide short-term and long-term opportunities for investors.
Traits to look for in growth companies include a strong leadership team and an industry with the potential for growth.
Investors should also want to see a record of strong sales growth and a large target market.
Avoid growth stocks that are overvalued.