Growth Stocks

These are stocks in companies that are considered to be “growing”. These companies may be delivering new products and services, or entering new markets.

These are stocks in companies that are considered to be “growing”. These companies may be delivering new products and services, or entering new markets.

Investors view these companies as having a lot of potential to grow fast, so are willing to pay a higher price for their shares today because they expect big things tomorrow. Basically, investors expect their share price to grow significantly.

Growth stocks tend to have a high price-to-earnings (P/E) ratio, and are unlikely to pay dividends because they are reinvesting their profits to drive growth. There is potential for big returns but also higher risk of losses.

Tech companies, such those operating in the artificial intelligence (AI) or electric vehicle (EV) space, are viewed by some investors as “growth stocks”.

Growth stocks differ to value stocks.

More terms

Forward pricing

Mutual funds are traded on a forward pricing basis, meaning the price you see will be different to the price you may trade at.
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Annualised Rate of Return

The average annual return an investor sees over a set period of time.
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Fixed Income

An investment that provides a fixed rate of return, often over a specific set of time.
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Venture Capital Trust (VCT)

A listed company run by a fund manager, investing mainly in private companies.e.
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Maturity value

What's the maturity value of a bond?
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Dividends

Find out what dividends are and how they can contribute to the growth of your investment portfolio.
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DMO

The United Kingdom Debt Management Office. It’s an executive agency responsible for managing the government’s debt and cash needs, primarily through issuing gilts and Treasury bills.
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Gilt

What is a gilt?
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Gross Margin

The difference between a company's revenue and the cost to produce its goods/services, divided by revenue.
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