Growth investing

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15. Conclusion

• The aim of investing in growth shares is capital growth, not income. It is more risky than other approaches but if you get it right the big winners will outweigh the big losers.
• The share price of a growth stock hinges on expectation of future earnings growth and on the multiple applied to those earnings.
• Don't forget the underlying business. Think about the products and services the company supplies, and ask yourself whether it can grow its sales and maintain profitability.
• Buying great businesses at fair prices is better than buying fair businesses at great prices.
• Run profits and cut losses. Sell when the story changes.
• In the current market conditions, the PEG system is looking a bit stranded. Many internet stocks have no earnings at all but are given supergrowth status.

You have now completed the course. To test your knowledge, take the Assessment test.

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

• One Up on Wall Street
• Beyond the Zulu Principle