Growth stock

In finance, Growth Stocks are stocks that appreciate in value and yield a high return on equity (ROE). Analysts compute ROE by taking the company's net income and dividing it by the company's equity. To be classified as a growth stock, analysts expect to see at least 15 percent return on equity.

Growth vs. Value investing

Since 1982, the growth stocks have beaten value stocks during:

• 1982
• 1985
• 1987
• 1989-91
• 1995-99
• 2007

During the rest of the years, the value stocks have done better. Note that the 5 years preceding the dot com bubble burst, growth stocks did better than value, since then value stocks have generally done better.

Some advisors advise investing half the portfolio using the value approach and other half using the growth approach.

See also

• Finance
• Financial ratios
• PE ratio
• Turnaround stock
• Value stock

Footnotes

External links

• Ratios converge between growth and value stocks
• How to Find the Ultimate Growth Stock
• DuPont: Despite Earnings Miss, Still a Growth Stock

References