Monday, December 27, 2010

Growth Stocks

Growth stocks are those companies with the best growth prospects and potential for capital appreciation. Growth stocks are characterized by strong business model, large potential market (domestic/global), scalability, first to market, competitive advantage, unique selling proposition, a game-changing product, and other traits that are likely to result in strong earnings growth. Typically growth companies will be priced higher than their peers or other stocks, in recognition of the strong earnings potential. The contrasting category of stocks are value stocks, which may be mature companies or companies that have fallen out of favor and are attractively priced - the middle ground is core or Growth At a Reasonable Price (GARP).

Synonyms: Growth investing, GARP, Growth funds, Growth style, Capital gains

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