Investing term
What is Growth stock?
A stock priced for above-average revenue or earnings growth — typically high multiples and reinvesting cash.
A growth stock is priced for above-average revenue or earnings growth, usually trading at high multiples and reinvesting its cash rather than paying dividends. Investors accept the rich valuation expecting rapid expansion to justify it. The risk cuts both ways: when growth delivers, the gains can be huge, but any stumble in those high expectations can trigger a brutal drop.
For example
A fast-growing tech company at 50× earnings is a growth stock — its price assumes years of rapid expansion, and punishes any disappointment hard.
Growth stock is taught hands-on in Stage 15 — Valuation for Investors.
See the lesson →