Growth stocks are stocks in a company that are growing fast and reinvesting their profits rather than paying high dividends. The share prices of such stocks grow and double or sometimes triple in days or months on the Exchange. Investors with the purpose of keeping their monies in the market for a longer time invests in this kind of securities to gain on their capital.
On the Ghana Stock Exchange for instance, shares of FML,EBG,FML,GCB,GGBL,SCB,TOTAL and UNIL are growth stocks since for the past five(5) to six(6)years their share prices have been increasing and profits are being reinvested. Standard Chartered Bank shares are currently priced in the Market at GHC 64.00 per share, meanwhile less than 3 years ago, this stock was priced than lower GHC 25.00 per share. This obvious is almost a triple jump in capital gain of the stock(SCB). Other growth stocks also perform really well on the GSE in terms of share prices.
One question is that, what is the benefit of investing in Growth stocks on the GSE? CAPITAL GAIN, is the answer. These stocks grow in share price because directors of such companies do not focus on only paying high dividends but rather reinvest the profits and in that case the company grows and investors build confidence in the stock hence invest. The demand of the stock on the market positively affect the prices of the shares on the market.
Growth investing is good and very rewarding but remember it requires time and patience. Keep investing and invest wisely.