After all, global stocks have entered into an indefinite period of volatility, with the markets tumbling on three consecutive days in February (in some instances by up to 8%).
However, this does not mean that financial market trading cannot deliver returns in the current climate. Instead, your focus should be on how you choose to invest, and the precise vehicles that you use to build a profitable portfolio.
High Growth Investment Strategies – What are They?
Take growth investing, for example, which is a strategy that compels investors to buy stock in companies that are trading higher than their intrinsic value. While this may sound counter-intuitive, it works on the assumption that the value of these companies is likely to grow further and ultimately exceed their real-time valuations.
In this respect, growth investing sits at the opposite end of the spectrum to value investing (through which individuals seek out stocks that are trading for less than their intrinsic value). In the case of high growth investment, traders simply look to invest more in firms that have the greatest scope for growth regardless of their real-time stock price, incurring greater risk in the process.
What to Look for in a Growth Investment Stock Option
If you look here, you’ll begin to understand that growth investment is one of the more simplistic trading strategies out there. It does carry a significant element of risk, however, particularly given the high cost of investment and the lack of certainty regarding the growth of an individual stock.
To negate this, you’ll need to determine the key characteristics that typically define high growth stocks. Take strong historical earnings growth, for example, which is a viable indicator that stocks will expand further in the future. As a general rule, you should look at growth of around 5% in firms that are worth more than $4 billion and around 12% for companies with a value of less than $400 million.
The key is to consider this information in the context of a companies’ real-time circumstances and growth plans, while identifying any issues that could impede expansion in the future.
Robust profit margins (both historical and projected) are also important, as a business cannot grow successfully without a healthy bottom line. This metric must also be considered in line with turnover and earnings growth, as firms that generate a high volume of sales without translating this into profit are unlikely to expand significantly in the future.