Growth Stocks

Growth stocks refer to shares in companies that are expected to grow at an above-average rate compared to their industry or the overall market. These companies typically reinvest their earnings to fuel expansion, rather than paying dividends to shareholders. Investors buy growth stocks in anticipation of capital appreciation, meaning they expect the stock price to rise significantly over time as the company’s revenues and profits increase. Growth stocks are often characterized by higher price-to-earnings (P/E) ratios and can be associated with tech companies and emerging industries. However, investing in growth stocks also carries a higher level of risk, as the expected growth may not materialize, leading to potential losses for investors.