![]() Therefore, investors usually earn capital gains from the rise in their share price. The reason for this being that these companies usually prefer investing their surplus cash into the business as it gives higher returns to shareholders rather than distributing the cash among them. These companies usually do not declare dividends and even if they do, the dividends are very low.Price ratios include P/E, EV/EBITDA and P/B ratios among others. Growth stocks usually trade at higher price multiples and valuations among peers, being valued at a higher premium justified by the better returns offered by these companies.Growth companies offer returns better and faster than peers and hence have different characteristics as compared to the broader industry, such as: List Of Best Growth Stocks in India COMPANY NAMEĬharacteristics of Growth Stock companies The above-mentioned are just a few reasons among many which can result in companies growing at an accelerated rate. Reasons for faster growth rate in the value of growth stocksįaster growth means that the revenues and profits of the company are expected to grow faster than the industry average due to multiple factors such as: The company employs new technology which is not only more productive but also more efficient than existing technology, thereby giving the company an edge over others and is driven by increased adoption.The company has innovative products and/or services which are catching up in the market faster than their peers, thereby giving the company a competitive advantage over peers.The company operates in an industry which is growing at a faster than average growth rate driven by increased penetration or adoption rate among its customers.Faster growth means that the revenues and profits of the company are expected to grow faster than the industry average due to multiple factors such as: Growth stocks are stocks which are expected to grow at a faster rate than the industry average or the average rate of the industry in the given country. Watch our video on how to analyse and pick Growth stocks for investments.Factors to consider to identify the best growth stocks to buy now.Reasons for faster growth rate in the value of growth stocks.
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