RIO Land Investment
Tips for Choosing the Right Type of Growth Stock
Sometimes referred to as glamor stocks, growth stocks are stock options that are expected to perform above the average for similar types of holdings. In most cases, these stocks will not pay out dividends but will increase in the value per share. For an investor who wants to find the best growth stock to add to a portfolio, here are some tips that will help.
The Stability of the Company
Always look at the history of the company issuing the shares. How stable has the company been in the past? Did the shares hold their value even during rough economic times? In relation to the past performance of the stocks, did they tend to perform well even when the rest of the market was sluggish? If so, then investing in those shares is likely a good idea.
Projections of Future Performance?
While the stocks do have a history of performing above average in times past, what are the reasons why the shares will continue to do so in the future? Look closely at what analysts have to say about market movements over the next six months to a year and take that information into account. The goal is to secure shares of stock that will appreciate in value as the months pass, and allow the investor to sell them at a large profit after a year or so. Unless there are sound reasons to think the growth pattern will remain consistent and maybe even exceed expectations, it would be best to look for a better option.
Comparing the Stock with Other Investment Opportunities
The whole idea behind investing is to generate more wealth. Think about the money it would take to buy a reasonable number of shares and compare the projected returns to some other type of investment purchase. For example, would it be better to invest in land that will likely appreciate in value due to development in a few years? Project the outcome of both investment strategies and see which one offers the most returns with the lowest rate of volatility. Chances are if the shares are really associated with a growth stock, buying the shares will be the better deal.
Remember that even seasoned investors need help from profess