Question regarding a high growth common stock?

Question

What are the advantages of a high growth common stock. I am so confused on investing. So much to pick from.

Answer 1

High growth is typically associated with high risk. That is the difference. A company is basically telling you that they have a really great project that will double or triple their stock value...So, if you want to take a big risk, go for it...but it may not happen, and then you have a big loss.

Answer 2

"Stock Investing For Dummies" is a great starting book for the basics.

Answer 3

A common stock share in a company that is growing will be worth more in the future.

Answer 4

The advantage of high growth is high profits.  Companies that are growing increase sales but should also increase cash flow and profit margins.  You see the result of this in rising EPS reports.  For example POT clocked in a 181% EPS gain last quarter.  Investors are drawn to companies that are making larger and larger piles of cash.  Since the market is forward looking, the stock price rises in anticipation of future profit growth.  For example, RIMM hit new highs this week in anticipation of next week earnings report.  So even if the report is good; the good news is "priced in" so to speak.  If the report blows away estimates, the shares will jump.  However, if they miss estimates, the share price will tumble (because the share price was valued for a good report).  

And the other side of it is time.  Growth stocks deliver shorter term gain, months instead of years.  Value stocks may take a long time to bring in similar profits.  While value stocks typically yield more gains, it takes longer to get your money.

Hope this helps.  And the "Dummies Guide" series is a great way for beginners to get their feet wet.