Companies that reinvest their earnings for achieving growth are the ones that offer growth stocks to shareholders. The growth rate of the companies is significantly higher than the average market growth rate. Unlike income stocks, investors do not earn any dividend from these stocks because the companies reinvest the profits in the business for accelerating growth in the coming future. The vision of investors who add the best growth stocks to their portfolio is to earn money through capital gains by selling the shares in the future. These stocks go through brisk trading because investors closely monitor the growth trajectory of the stocks and sell the stocks at the opportune moment to make good gains. Only companies with high development and growth potential can offer top growth stocks that allow investors to accumulate massive wealth.
A close look at growth stocks
Non-dividend paying stock is an apt description of a growth stock with many other characteristics that investors should understand to consider including it in their portfolio. Typically, these stocks have high P/E or price-to-earnings ratio. However, even if there might be no earnings currently, it should happen in the future. The stocks have high growth potential and are expensive due to the high P/E ratio. Still, such valuations are cheap, provided the company accelerates the growth rate, shooting up the share price. Investors must be ready to pay a high price for the stocks by expecting growth, which means that these stocks are risky. Failing to meet the expectations, investors might have to face heavy losses.
Exploring a few of the best growth stocks to buy now.
Amazon.com, Inc. (AMZN)
Amazon, the eCommerce and technology behemoth tick the right boxes of great technical solid fundamentals and has a history of Big Money activity to qualify as one of the top growth stocks. Big Money trading is crucial because it can alert you about the fundamental forward picture of any stock. Investors would naturally want the odds on their side when searching best growth stocks. Despite the volatility, Amazon stocks garner investor attention because of the vast growing business segments like Amazon Web Services that fast track overall growth. The company recorded strong sales and earnings, and its earnings estimates are looking good. With 21.7% annual sales growth, and EPS growth rate of 50% for three years, and a 2-year vs. 1-year EPS growth estimate pegged at 47.9%; Amazon stocks are worth their value.
Align Technology Inc. (ALGN)
The makers of Invisalign, the popular tooth straightening system, have historical Big Money signals, although its one-month performance was dismal (-19.5%) but did not impact the long-term prospects. The company recorded double-digit growth in earnings and sales. Over the last three years, the company’s sales growth was 28.3%, and the EPS growth rate was an incredible 86.4%.
Visa Inc. Class A (V)
The credit card payment and technology company offers growth stocks that investors find pretty lucrative. Visa has Big Money buying shares with one-year sales growth of 10.3%, profit margin of 49.8%, and 2-year vs. 1-year EPS growth estimate of 18.3%.
All these growth stocks are popular among investors for their specific long-term benefits. It is up to you as to which one you would go for.
