Growth stocks

Opting for growth stocks is based on investing in companies whose short-term revenues and profit projections are excellent. A new technology or dominant product on the market is considered a good omen for investors seeking an accelerated growth rate.

Technology stocks, which were favoured by investors in early 2000, and biopharmaceutical companies are examples of growth companies.

Sometimes, it can be very profitable to have stocks in such growth companies, but you must be able to accept and ride the great volatility in the markets. The growth approach is usually considered riskier than the value approach.

Often, value stocks are at their highest when growth stocks are at their lowest, and vice versa. Consequently, investors should select stocks that complement each other in order to obtain more uniform total returns and a less volatile portfolio overall.