Growth Stock

Both "Growth" and "Value" are labels put upon a stock or mutual fund by investors.

Usually they represent styles in investing - and not all stocks fit one category or the other, Looking for cheap stocks is value investing. For example, a low P/E ratio often is considered a signal that a stock is "cheap". An investor may buy that stock on just that signal alone. The converse is not necessarily true. A "growth investor" does not usually buy a company simply because it is overpriced, but will usually look at how fast it is growing and what is expected in the future.

The stock of a company that grows its earnings and revenues faster than average is known as a growth stock. These companies usually pay few or no dividends, since they prefer to reinvest their profits in their business.

Investors who focus on growth try to predict which companies will grow faster in the future -- faster than the rest of the stocks in the market, or faster than other stocks in the same industry. If you're successful in buying a company that does grow faster than other companies, then it's likely that the price of that company's stock will increase as well, and you can make a profit.