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Growth Stock

Glossary

A growth stock is a company that is expanding its revenue and earnings faster than the overall market average. These companies typically reinvest their profits rather than paying dividends, focusing on scaling their business.

Characteristics of Growth Stocks:

  • High Revenue Growth → Sales and earnings increase rapidly.
  • No or Low Dividends → Profits are reinvested into expansion.
  • High P/E Ratio → Investors are willing to pay a premium for future potential.
  • Technology & Innovation Focus → Many growth stocks come from tech, biotech, and disruptive industries.

Examples include companies like Amazon $AMZN, Tesla $TSLA, and Nvidia $NVDA, which have historically delivered massive returns over time.