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Investing In Growth Stocks
Growth investing is investing in companies that
are showing signs of growth with the idea that
they will continue to grow. These investors
closely monitor companies that are growing, buy
their stocks and then sell the stock for profit
while the company is still on the uphill climb.
The key here is timing. While the stock may not
have reached it's full potential, you want to
sell before it starts to fall again. This will
give you the best return on your investment.
But investing in growth stocks has it's
challenges. You have to take into consideration
that as the company gets bigger it has to do
more to achieve growth. A company may have 40
locations starting out, but ten years later they
may 1400 locations. To keep a good rate of
growth, they are going to have to open thousands
of locations each year.
Also, think about what happens when a company
starts to grow. The competition heats up and
other companies will get into the act.
Competition will put a crimp in your profits.
While there may be a few companies that are
immune to the competition, they are very hard to
find.
So how do you find a good company to invest in
that is going to make you a decent amount of
money? The first thing to do is to always be on
the lookout for companies with good growth
potential but don't get sucked into paying a
steep price. This will eat into your returns.
Work to find a business that has solid barriers
against competition. Don't worry if the growth
return rate isn't very high. This type of
business will be around longer and sustain
superior long-term returns. Look for companies
that have high quality, unique, products that
will be hard to emulate. This will keep the
competition low for some time, leading to years
of great returns on your investment.
Research is the key. Having a good eye and
instinct for growth companies that will stand
the test of time doesn't hurt either. Look at a
companies product. Try it out for yourself. Get
a plan of what that particular company is going
to do in the future to sustain growth. Pick the
plan apart and analyze it thoroughly. There is
no guarantee that investing in a growth stock
will make you a ton of money. But it will help a
lot if you do your homework and become well
informed before you buy.
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