How to Find a Growth Stock?

Investors have many tools they can use to make stock market profits. One popular strategy is to purchase growth stock shares which are companies expected to grow their profits (or revenues) at a faster than average pace. Companies that can do so for an extended period of time appear to be rewarded with a higher share price, allowing their investors to gain substantial returns by appreciating the capital. Keep in mind: potential high-growth companies come with both reward and risk, so it’s important to know the fundamentals of what growth investment entails, its costs, and how to mitigate them before a growth investment strategy begins.

But when you’re ready, in what way will investors consider growth stocks to invest? Here are a few tools I use to classify companies about to take off.

What is a growth stock?

A growth stock is a corporation whose profits (or revenues) are expected to increase at a much faster rate than the average business in its sector or the market in general. In general terms, the faster a corporation can increase its earnings, the higher its share price should be appreciated. In addition to earnings, there are a few other common traits to look for in productive growth stocks, such as large market opportunities and solid business models.

Where to look for growth stocks

Looking at a list of high growth stocks, you’ll find that many of these businesses didn’t exist a couple of decades ago but have become household names since. Amazon.com (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Ulta Beauty (NASDAQ: ULTA) all started out as tiny players in their respective markets but always convinced consumers to buy from them rather than compete. That helped drive enormous growth in revenue and profit over the years and transformed those businesses into winning investment.

One approach is to dig through your recent habits to see if you can find goods or services that you frequently purchase from today that you haven’t had before. When you (or your friends) have fallen in love with a new product or service, then there is a good chance that it is worth researching the business behind the product.

Keep an eye out for macro societal trends

The best growth stocks tend to take advantage of a massive change taking place in society. Companies capable of capitalizing on a phenomenon that takes years to play out can often see their revenue and profits rise for years on end, and can generate huge returns for investors.

So what macro trends are happening right now that investors can take advantage of? Here are a few that I’m following with great interest:

Health and wellness

Did you notice more Americans have started adopting a healthier lifestyle? The movement is changing in many ways, such as the growing popularity of yoga to increasing organic food use. This is a phenomenon that looks like remaining here is going to benefit a lot of different businesses. Through organic food retailers, such as United Natural Foods, to yoga wear manufacturers, such as lululemon athletica, there are many ways in which investors can benefit from this phenomenon.

To know more about Stock Investment, you can visit our website https://www.jayantharde.com or contact our representative at +91 712 2282029 or meet us at 51, Gurukripa, Old Sneha Nagar, Wardha Road, Nagpur – 440015.

The war on cash:

I have become used to using debit and credit cards to pay for everything, so I was shocked to learn that 85 percent of global transactions are still using cash or checking. Given the advantages of cashless transactions— quicker purchases, never having to deal with change, the ability to earn bonuses— I am a strong believer that many customers would turn over time to plastic. That’s a big reason why my personal portfolio is full of companies like Visa, Mastercard and Square that will benefit from this move.

The rise of online advertising:

Want to get cold calls? Receiving mail from junk? Watching TV commercials? Not me either. This is why customers use caller ID, DVR, and don’t call lists to limit their exposure to these frequent interruptions. However, these facts make it more difficult for large businesses to get their message out to potential customers. That’s why more of them move their ad dollars to online platforms to keep them in contact with their customers.

Stock screening tools

Free screening tools are other reliable sources which I use to find growth ideas. While investors can choose from many stock screeners, my personal favorite is called Finviz. This easy-to-use database has data on more than 7,300 companies and investors can enter a number of parameters to help them find stocks that meet the most valuable criteria.

Market cap: 

This metric is a simple way of measuring the size of an enterprise. I tend to stay away from microcap companies because I hate penny stocks

Profitability:

Companies which display consistent profits appear to be far less risky than those which burn money. That’s a big reason why I tend to favor that stocks that have crossed into the black already.

Sales growth:

For years on end, the best growth stocks are capable of growing their earnings and there’s no reliable way to do that without also increasing revenue.

Projected profit growth:

Wall Street analysts are paying large sums to keep a close eye on businesses and write reports forecasting their growth levels in the next few years.

Sector: 

Some markets are more difficult areas for investors to make money than others. I shy away from commodity industries such as raw materials and electricity and concentrate my attention instead on sectors where businesses can build a sustainable competitive advantage.

Balance sheet:

While debt isn’t always a bad thing, I don’t like investing in companies holding huge amounts of debt on their balance sheets. That’s why I like using the debt-to-equity ratio to get rid of highly indebted firms from my quest.

To know more about Stock Investment, you can visit our website https://www.jayantharde.com or contact our representative at +91 712 2282029 or meet us at 51, Gurukripa, Old Sneha Nagar, Wardha Road, Nagpur – 440015.