Growth stock

Under a growth stock (English: growth stock ) is defined as a corporation, over a long period of time - has a steady, largely non-cyclical and particularly high sales and profit growth across - possibly decades. The prerequisite for this is a business model that can be reproduced by gaining additional market share, taking advantage of market growth, regional expansion or by transfer of best business management processes and procedures for new products and services more and more.

Growth stocks are rare exception Company. Known growth stocks are, or were, for example, Coca -Cola, Wal- Mart and Microsoft, the Internet companies eBay and Google as well as the sporting goods manufacturer Puma, fashion jewelry necklace Bijou Brigitte and the hot air damper manufacturer Rational.

In the financial literature occasionally on high-technology companies (so-called technology stocks ), the term " growth stock " limited and ignores the economic aspect. This definition goes back to the time of the New Economy boom of 1999-2001, when the German Börse AG the term " growth stock " flat rate to all participants of their venture capital market segment " New Market " anwandte. In fact, however, the Neuer Markt also contained many non-high- technology companies, for example, from the media industry. After the decline of the New Market is a part of the last poor image of the term " growth stock " has stuck.

Financial Analysis

For easy share valuation of growth stocks, the ratio price-earnings - growth ratio ( PEG ) is used. Accordingly, the appropriate price-earnings ratio is approximately at the level of mean annual, expected for the coming years, the percentage earnings growth.

Professional analyzes are usually based on the much more complex discounted cash flow method, assuming a uniformly growing free cash flows, and thereby come to similar results as the PEG method.

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