Growth investing

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1. What is a growth stock?

'Growth stock' means different things to different people. The original concept was clear enough: it was a company whose profits and share price would beat the market over a long period.

The idea was to buy a little acorn then sit back and watch it turn into a giant oak like a Glaxo, a Cisco Systems or a McDonalds.

But that definition has been diluted to the point where growth investing now refers to any style that aims to produce capital growth rather than income.

There are lots of ways of doing this and some of them have nothing to do with acorns growing into oaks:

• recovery shares
• special situations
• emerging markets
• blue chips
• technology and internet stocks
• smaller companies
• second-hand life policies

In this tutorial we focus on identifying companies whose earnings are growing rapidly since ultimately this is what characterises growth stocks.

1. What is a growth stock? 2. Comparison with value investing 3. Traditional characteristics of a growth stock 4. Anatomy of a growth stock - Peter Lynch 5. Ten dos and don'ts from Peter Lynch 6. Jim Slater - The Zulu Principle 7. Earnings growth 8. The PEG factor 9. Competitive advantage 10. Do growth stocks have to be small? 11. A short diversion into internet stocks 12. When to sell a growth stock 13. Other factors 14. Case study of a growth stock - Sage 15. Conclusion

• Value Growth Investing
• One Up on Wall Street