Growth stock
In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry.[1] A growth company typically has some sort of competitive advantage (a new product, a breakthrough patent, overseas expansion) that allows it to fend off competitors. Growth stocks usually pay smaller dividends, as the companies typically reinvest most retained earnings in capital-intensive projects.
Criteria
[edit ]Analysts compute return on equity (ROE) by dividing a company's net income into average common equity. To be classified as a growth stock, analysts generally expect companies to achieve a 15 percent or higher return on equity.[2] CAN SLIM is a method which identifies growth stocks and was created by William O'Neil a stock broker and publisher of Investor's Business Daily .[3] In academic finance, the Fama–French three-factor model relies on book-to-market ratios (B/M ratios) to identify growth vs. value stocks.[4] Some advisors suggest investing half the portfolio using the value approach and other half using the growth approach.[5]
See also
[edit ]- Alternate stock categorizations:
- Treatment of growth:
References
[edit ]- ^ "Top Growth Stocks". InvestingDaily.com. Retrieved 2010年06月03日.
- ^ "Sivy on Stocks". CNNMoney.com. 2004年08月06日. Retrieved 2004年08月18日.
- ^ O'Neil, William J. (2002). How to Make Money in Stocks: A Winning System in Good Times or Bad . The McGraw-Hill Companies. ISBN 978-0-07-137361-6.
- ^ Fama, Eugene F.; French, Kenneth R. (1998). "Value versus Growth: The International Evidence". The Journal of Finance. 53 (6). American Finance Association, Wiley: 1975–1999. doi:10.1111/0022-1082.00080. ISSN 0022-1082. JSTOR 117458 . Retrieved 2021年12月28日.
- ^ "Multi-Style Investing: A Tale Of Two Investment "Styles"". Bernstein Global Wealth Management. 2004年07月22日. Archived from the original on 2012年09月07日. Retrieved 2009年08月20日.
External links
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