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Growth stocks

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

Professional Client

An investor that is able to meet several regulatory criteria.

Base rate

What's the base rate?

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Hypothesis Testing

A mathematical test used to determine whether a claim is true or false.

Accounting standards

The rules a company follows when preparing financial statements.

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

Withholding Tax

A tax deduction made at the source of the payment.

Hedge Fund

Investment funds that are often associated with riskier and shorter-term trading strategies.

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

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