Investing in Growth Stocks

Jude

Investing is not a one size fits all skill. Especially when it comes to Growth Stocks. An investor must be updated with market events, know different accounting terms to grasp financial statements and learn how industries work.

Investment in growth stocks is branded as a fantastic way to earn staggering wealth in the stock market. The trick part: The investor must learn where, how, and when to invest.

What are growth stocks?

Growth stocks are the star representative of their industry. When it comes to digital advertising, Facebook is a shining example. Similarly, when looking for stocks in streaming entertainment, Netflix will lead the race.

With this example, it is understandable that growth stocks are the companies that register high revenue and earnings at a rate faster than their competitors or the market as a whole. However, growth stocks aren't only about picking stocks that are currently going up.

The market for growth stocks

A growth stock will be of a company whose R&D investment has shown significant results. It may have launched innovative products/ services that capture sizable market share or develop a new market on its own, which leads to the further creation of new industries.

Companies that sustain their fast growth trajectory for a longer time get rewarded by the market. In the process, its shareholders also get a handsome return on investment. Its speedy growth leads to better returns.

Value stocks vs. Growth stocks

Value stocks are stocks from well-established companies that trade their shares for a price lesser than their worth. It is supposed to give returns over a long period and is suited for risk-averse investors.

Growth stocks, however, are priced higher than their average metrics (price to earnings, price to free cash flow ratio, and others). Even though they are high-priced stocks, they are capable to deliver soaring returns due to their astonishing growth.

Current examples of Growth stocks

As mentioned earlier, growth stocks belong to those companies that have carved out a niche for themselves or have registered enormous growth due to their innovative products. Those who know accounting will easily understand their financial reports. While one can easily learn about accounting with blogs like Ebetterbooks, mastering investment in growth stocks will take time. Some popular growth stocks in 2022 are:

Nio (NASDAQ: ZM)

Sector: Electric Vehicles

The electric vehicle sector has vast potential to grow. The company was pegged at ~$90 billion, but it later produced only 20,000 vehicles. As it evolved with its supply chain changes, it paved its way to high growth.

By the end of 2021, it delivered ~91,000 EVs, more than eight times its production of 10,900 EVs in November. It has planned to increase its production limit by 600,000 EVs by the end of 2022.

New EV models, emphasis on the BaaS program, up-gradation of batteries, and other areas of innovation is giving them a soaring high growth. Nio is a growth stock poised to show great returns for investors.

Zoom (NYSE: NIO)

Sector: Communications, Remote Work

COVID-19 made working together impossible. Therefore, remote work arrangements became a necessity. That's where zoom seized the opportunity by bringing its free platform with a simple user interface.

Even though COVID has subsided, companies have realized how work from home working style is efficient, beneficial, and employee-friendly. Not to forget that infectious diseases will be more frequent in the future.

It rolled out features, such as cloud-based phone features, uncomplicated navigability through a mobile device, video collaboration tools, and others. There is no sign of stopping for this growth stock now.

Jude has a master's degree in Finance. Currently, he is working as a Financial Advisor for a bookkeeping-based startup ebetterbooks. He is also a contributor to other renowned accounting blogs.

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My name is Jude. The Quickbooks development team was where I previously worked. Now I help people with Quickbooks errors. I am also an expert in Quickbooks error solutions.

Wilmington, DE
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