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WHY GROWTH STOCKS?

  • EARNINGS GROWTH: The annual rate of growth of earnings is a key element that drives stock prices higher. Generally, the greater the earnings growth, the better.
  • EARNINGS ACCELERATION: When the earnings acceleration (rate of change of earnings growth) is positive, it ensures that earnings growth is likely to continue.
  • P/E RATIO AND GROWTH RATE: The growth stocks generally command a higher P/E ratio because their future earnings are expected to increase substantially.
  • INNOVATION: Growth is driven by superior products and new technologies as we have seen with Apple and similar companies.
  • HIGH GRADE GROWTH: Such companies are characterized by a history of pristine balance sheets with low or even zero debt and superior returns on equity.