{"id":12073,"date":"2022-12-15T17:43:08","date_gmt":"2022-12-15T14:43:08","guid":{"rendered":"https:\/\/www.robomarkets.com\/blog\/?p=12073"},"modified":"2023-10-12T14:32:49","modified_gmt":"2023-10-12T11:32:49","slug":"how-to-invest-in-growth-stocks","status":"publish","type":"post","link":"https:\/\/www.robomarkets.com.cy\/blog\/investing\/strategies\/how-to-invest-in-growth-stocks\/","title":{"rendered":"How to Invest in Growth Stocks"},"content":{"rendered":"\n

In this article, we will discuss investing in growth stocks<\/a>. Also, we will explain how to look for such stocks, what their characteristics are, and what risks emerge from investing in growth stocks.<\/p>\n\n\n\n

<\/span>What growth stocks are<\/span><\/h2>\n\n\n\n

Investors can conditionally be divided into two categories: those who buy growth stocks and those interested in cost stocks. Growth stocks are securities of companies with fast-growing revenue and serious future growth prospects. Cost stocks are those that, to investors’ minds, trade seriously below the fair price.<\/p>\n\n\n\n

Growth companies, in their attempt to invest maximally in product development and improvement of their position in the market, either pay no dividends<\/a> at all or pay out minimal dividends. Quite often, such companies belong to the tech or biopharma sector.<\/p>\n\n\n\n

One example is Netflix Inc.<\/a> (NASDAQ:NFLX) which was the first to operate in the market of video broadcasting. From 2018 to 2021, the number of its subscribers increased from 137 million to 214 million users, while its shares skyrocketed more than 400% from 2017 to 2021. However, as soon as the competition increased in the sector, Netflix started losing its market share fast: while it took up 48% of the US market in 2019, already in 2021, its market share accounted for just 29%.<\/p>\n\n\n\n

\"Netflix<\/a>
Netflix Inc. share price chart<\/em>*<\/figcaption><\/figure>\n\n\n\n

<\/span>How to detect growth stocks<\/span><\/h2>\n\n\n\n

As a rule, the price of such stocks depends on the expectations of investors, which are based on the overall market growth, and their view on whether the company has enough money to develop its business and whether its management operates efficiently. Investors may be mistaken both when selecting a company and assessing it; hence, they check the following to make sure:<\/p>\n\n\n\n