Article talks about growth stocks investing, growth stocks for 2023, identify growth stock, will growth stock recover, are growth stock high risk.
Even though 2022 has been a particularly challenging year for growth companies, tech giants, and the overall market in general. Some analysts are highly optimistic that 2023 will be better than 2022 for growth stocks.
The S&P index dropped 20% in 2022, whereas growth stocks crashed more than the index by nearly 30% which has created an opportunity for investors to take their position to make a highly profitable portfolio.
What are growth stocks?
Growth companies are kind of revolutionary companies which have a faster pace in generating higher revenues, and earnings. They are termed revolutionary as their investments and delivery in Innovative technology and products have given bigger market share and more profit in the shorter term.
Due to higher inflation and Fed interest rates, fear impacting consumer spending and buying process has impacted in 2022. Looking at the prices which seem to be higher as compared to other stocks, 2022 drop growth stocks are at discounted rates for investors. Opportunities like this can be once in a decade which needs to be capitalized to grow a portfolio higher and greener.
How to identify growth stocks?
There are 3 Tops characteristics of a growth stock which need to be analyzed before making any investment decision in Growth Stocks
- Business – Market share
- Finance – Consistent growth
- Competitive advantage
Top stocks fall under Growth stock criteria – APPLE (APPL), AMAZON (AMZN), META PLATFORM (META), Alphabet (GOOGL)
AMAZON (AMZN) stock is one of the best which covers all characteristics to be one of the Top Growth Stock. Amazon’s revenue for FY2021 was $450+ B which has high business shares, competitive advantage, and Consistent growth in all of the Amazon business. A few Amazon businesses are listed below.
- Amazon Retail: E-commerce (amazon.com), Prime video – This contributes more than 40+ of the business share
- Amazon Cloud Services: AWS – 30+% market share
- Amazon Advertising – $30+ B business
- Amazon Logistics – 20% + market share.
Questions to consider before investing in Growth stock?
Along with the above three characteristics, questions need to be answered before investing in any growth stock.
- How much are you willing to Pay for this stock? – Calculating the intrinsic value of the stock is important.
- Identify the reason why the stock is temporarily down or it has major issue which is permanent in nature.
If you are interested in META stock analysis can be the reference in this Article https://www.readingcafeusa.com/meta-stock-is-down-70-is-it-a-buy-or-it-is-a-dead-stock/
FAQs
1. Which growth stocks to buy in 2023?
APPLE (APPL), AMAZON (AMZN), META PLATFORM (META), Alphabet (GOOGL) are the best ones. Please do your due diligence to verify all criteria before investing.
2. Are growth stocks high risk?
Stock market investing always has a risk. It is very much important how you invest. Quantity, diversification, Fundamental analysis. If you are new to stock market investing. Please refer guide for stock market investing https://www.readingcafeusa.com/beginner-guide-for-stock-investing/
3. Do Growth stock give Dividends ?
Yes, some growth Stocks give Dividends. One of the best examples to Invest in is Microsoft (MSFT)
4. Difference between Growth stock vs value stock
The basic difference between Growth and Value stocks is the space with which this type of stock grows over time. Growth has more Volatility along with Price fluctuation whereas Value stocks are steady over time. A good article can be referenced on https://www6.royalbank.com/en/di/hubs/investing-academy/chapter/growth-vs-value/jv7atfjr/jv7atfto
5. What are good books for Growth Stock investing?
A book authored by Terry Smith is a good read. Terry Smith was a stock broker, bank analyst, and then he became head of UK company research at UBS Phillips & Drew. If Interested to buy: https://amzn.to/3P14fJJ
