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A growth stock is a company expected to rise faster than the overall market, offering bigger gains for investors who don't mind risk

A growth stock is a company expected to rise faster than the overall market, offering bigger gains for investors who don't mind risk

Growth stocks offer larger gains than other stocks, so they're valued by investors seeking substantial appreciation in their portfolios.
Caroline Purser/Getty Images




Growth stocks are equities that outperform the market, their share prices increasing at a faster pace.




Growth stocks are often companies in innovative fields. They have high earnings but don't pay dividends.




Growth stock share prices can be inflated and swing sharply, especially with young, unproven firms.




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Most investors want the stocks they buy to grow or appreciate as the financial pros say. But some stocks appreciate a lot more than others. This is particularly the case with so-called growth stocks - equities that generally increase in value more rapidly than the average. They outpace the stock market, in other words.They have a lot of appeal and get a lot of press. But as with any investment, they have drawbacks as well. Let's go through the ups and downs of growth stocks.

What is a growth stock?

"Growth companies or stocks typically have a recent history of growing or are expected to grow their revenues and profits at a faster pace than the market," says Niladri Mukherjee, the head of CIO portfolio strategy at Merrill Lynch. "They tend to operate in newer and faster-growing industries and are disrupting traditional ways of doing business."
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