Growth investing – Investing in companies that are growing by more than the market appreciates
A growth company is anticipated to grow at a rate equal to or greater than the average for the market. These companies generally pay little or no dividends, as the companies usually want to reinvest any earnings in order to accelerate growth in the short term. Investors then earn money through capital gains when they eventually sell their shares.
Growth investing often looks for companies that are valued as such but where there may be greater growth than the market expects. A growth stock may either disappoint or positively surprise investors with their results. The outcome can be negative or positive until the valuations are perhaps deemed to be too expensive.
See also Value investing