Monday, December 27, 2010

Growth Investing

Growth investing is an investment approach that seeks to capture capital appreciation from investing in stocks which the fund manager thinks will go up in price. Generally growth investing refers to picking growth stocks which are basically companies with stronger growth prospects e.g. that are in the growth phase of the company life-cycle, and will also generally have higher valuations (as other investors also recognise the growth potential). There is also an off-shoot of this style called GAARP or GARP i.e. "Growth At A Reasonable Price", which refers to infusing elements of value investing into the process e.g. monitoring PE ratios, dividend yields, price to book ratio, price to sales etc.

Synonyms: Growth stocks, GAARP, Capital appreciation, Growth potential

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