GROWTH STOCKS AND MUTUAL FUNDS TO INVEST IN
Buy growth stocks early in the company’s rise to greatness. Watch revenue and earnings rise. Reap those big returns. Then practice what you've learned with our free stock market simulation.
BEST GROWTH STOCKS TO INVEST IN
Here are your best performing growth stocks in the last year:
|DHI||D.R. Horton Inc.|
|DISCA||Discovery Communications Inc.|
|URI||United Rentals Inc.|
TOP GROWTH MUTUAL FUNDS TO INVEST IN
Check out some popular growth funds in the last year:
|TPLGX||T. Rowe Price Instl Large Cap Core Gr Fd|
|TRBCX||T. Rowe Price Blue Chip Growth Fund|
|FBGRX||Fidelity® Blue Chip Growth Fund|
|JIGAX||JPMorgan Intrepid Growth Fund|
|VPMCX||Vanguard PrimeCap Fund|
|FDSVX||Fidelity® Growth Discovery Fund|
|TLIIX||TIAA-CREF Quant Large-Cap Growth Fund|
|FTQGX||Fidelity® Focused Stock Fund|
|TRLGX||T. Rowe Price Institutional Lrg Cp Gr Fd|
|GLCGX||Goldman Sachs Large Cap Gr Insghts Fd|
WHAT ARE GROWTH STOCKS?
If you possess stocks in a successful company whose earnings, relative to the market, are expected to continue growing at an above-average rate, you’ve got yourself some growth stocks. Rather than yielding a super high income, growth stocks tend to increase in capital value. There’s a lot of hype surrounding these special (and pricey!) stocks; and it’s for good reason. They typically have impressively high price-to-earnings ratios. In most cases, the company would prefer to reinvest retained earnings in capital projects, so it’s not typically common for growth stocks to pay dividends. Instead, growth investors tend to receive returns from future capital appreciation. The return makes it worthwhile, but be prepared to pay top dollar to get involved in the growth game.
Philip Fisher, a pioneer in growth investing, wrote a book in which he spends an entire chapter urging readers to purchase shares of superbly managed growth companies – specifically technology companies. The pace of change in the tech sector creates an environment that’s ripe for disruptive innovations. Fun fact: Fisher started out as a value investor! His style evolved following lessons learned in the 1929 stock crash. He learnt the hard way that over time, a well-selected growth stock would substantially outperform a statistical bargain. Fisher emphasized, repeatedly throughout his career, the value of long term investing.
OTHER TYPES OF GROWTH INVESTING
Growth Mutual Funds
Growth mutual funds are best characterized by their laser focus on capital appreciation. As with growth stocks, dividend payout is a rarity, so if that’s what you’re after – keep walking. You’ll also require a holding period of five to ten years; so make sure your time horizon allows for that. Portfolios would consist of companies with above-average growth in earnings – that of which would be reinvested into things like acquisitions, expansion, research and development, etc. Growth funds are for the risk-hungry. The potential is high but the risk may be higher, so make sure you have the stomach for it before investing.
Growth stock dividends are ideal for those who find the predictability of dividend-paying companies boring, but whose risk tolerance is not particularly high enough to experiment with the more volatile companies. Growth stock dividends offer an appealing combination – the security of a consistent dividend along with the excitement of an increasing stock price. Dividend growers represent a group of companies who reinvest part of their earnings in the business and distribute the rest to stockholders. Rising profits subsequently mean rising stock prices along with rising dividends.
GROWTH INVESTOR RESOURCES
Growth Investing Software
HGSI Investment Software: with its easy-to-interpret visual presentation and broad range of technical tools, this software performs comparative analyses of many groups of securities.
F.A.S.T. Graphs : Two subscription options are offered to allow for deeper and faster stock research.
Growth Investing Books
Here are some must-reads if you’re serious about getting into the growth investing game.
Benjamin Graham and the Power of Growth Stocks:Lost Growth Stock Strategies from the Father of Value Investing
GROWTH INVESTING INDICATORS
Brand New Technology
Brand new technologies tend to be unproven, and growth companies spend a lot of money on development and ramping up production.
Crazy PE Ratios
Growth stocks typically have super high PE ratios . A company has worth beyond its earnings and its important to balance intrinsic value against the money the company makes. Future potential should also be priced in.
Bump in the Growth Story
It’s inevitable that all growth stories will eventually fizzle out. Like a pendulum, the market is forever swinging. When growth comes to a halt, a more realistic per share price for the stock settles in. There are two possible outcomes here: either the company is now correctly valued (and was grossly overrated in the past) or the company is currently under-valued and poised for a strong rebound in the near future.
BEST STOCK NEWSLETTER OF 2020, September 27, 2020 UPDATE
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We have been tracking ALL of the Motley Fool stock picks since January 2016. That's almost 5 years and 114 stock picks. As of Friday, September 25, 2020, TWO of their 2020 stock recommendations have already quadrupled (ZM and TSLA), another one has tripled and 2 more have doubled (SHOP and NVTA all in just the first 9 months of 2020.
In addition, 7 of their 2019, 9 of their 2018, 9 of their 2017 and 12 of their 2016 picks have also doubled. Best of all, over the last 5 years the average stock pick is up 144%. That beats the SP500 by an average of 106%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.
- Zoom Video (ZM) – April 16, 2020 pick and it is already up 230%
- Shopify (SHOP) – April 2, 2020 pick and it is already up 177%
- Zoom Video (ZM) – March 19, 2020 pick re-recommended and it is already up 301%
- DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 33%
- NVTA picked February 6, 2020 is up 102%
- Tesla (TSLA) picked January 2, 2020 before the crash and it is up 373%
- HubSpot (HUBS) picked December 5, 2019 and it is up 92%
- Netflix (NFLX) picked November 21, 2019 and it is up 55%
- Trade Desk (TTD) picked November 11, 2019 and up 146%
- Zoom Video originally picked Oct 3 and it is up 546%
- SolarEdge (SEDG) picked September 19, 2019 and it is up 125%
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