Growth Stock

Growth stocks are shares of companies that are expected to grow significantly faster than the overall market, driven by high earnings growth, innovative products, or expanding market share. These companies typically reinvest profits into the business rather than paying dividends, aiming for capital appreciation. Growth stocks are often found in sectors like technology and healthcare, where innovation drives rapid growth. While they offer high return potential, they also come with increased risk due to their dependence on continued expansion.

Example

A technology company developing cutting-edge software is considered a growth stock because of its potential to rapidly increase sales and earnings, attracting investors seeking capital gains.