Growth Stocks explained



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Growth Stocks explained


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Once we are clear what is growth investing and difference between Value Investing vs Growth Investing, let us understand certain characteristics of Growth Stocks.

Perhaps this may be the longest most difficult chapter in this Share market tutorial simply because we need to learn to predict future which, at moment, seems next to impossible ! By predicting future we are not talking of few days or months, we mean few years and decades !  
growth stocks
If I will tell you it is simple to predict future, obviously you will not believe me ! So I will take help of Mr Warren Buffet investment strategy to understand how he chose some shares. I admit it is very easy to say in hindsight today but this Chapter is more about WHY then WHAT he bought !

Before I tell you about 2 financial ratios of Growth stocks, lets us first understand the amount of wealth creation possible with few examples of Growth Stocks.

STOCK INVESTMENT GROWTH INVESTING VALUE INVESTING STOCK MARKET COURSE FINANCIAL PLANNING

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Rishi Kashyap
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Many times you may have heard stock experts ("whatever that mean") recommend to just buy and hold good / great stocks !
They mean Growth stocks !

Before giving examples of Growth Stocks, I highly recommend you to go through below chapters, to understand the value of time in any Investment.

  1. Compound Interest simplified
  2. Rule of 72
  3. Getting rich simplified
  4. CAGR Calculator
  5. Good Stocks vs Great Stocks (Plz read Small Cap vs Mid Cap vs Large Cap Stocks)

Defining Growth Stocks !
Many stocks can become multi-baggers in short run, Growth stocks however grow for many years or decades in future !
I hate vague definitions, they are never useful !
If you cannot define it or put a number or defined boundary, then you will never know when you have reached there !
GROWTH STOCKS should grow the Share price minimum 10 times (10X) within 10 years !
This is just a simple definition created by me ! Please feel free to modify your expectations, as I am more than happy even with 6X !

6X-10X in 10 years comes around 20-25% CAGR return, which is much more than INDEX (Sensex and Nifty) return of 13-14%. For me the base is the INDEX returns of 13-14 %.
In coming chapters, as we learn more about Growth Stocks, we will even dis-regard this definition, however for now, lets stick with this DEFINITION to move ahead !

Shares name mentioned in case studies are for educational purpose only and not to be taken as recommendations. Case study stocks may have been good investment at that moment of time which may have changed at the time of reading.
 
Please learn share market basics & how to value stocks before investing or consult a good Investment advisor.
Rishi kashyap is not a certified Financial advisor, please contact your Investment advisor if you do not know investing

Examples of Growth Stocks
Before I give examples of growth stocks, in this Share market tutorial, let me clarify about one thing ! I do not like this "IF YOU HAD INVESTED 10,000" BULL HORSE S**T, nonsensical comparison. (Plz read Investment and fooled by luck)

2 reasons :
  1. Dates may be manipulated.
    Many times, specially for those who have vested interest in getting you invested, carefully choose dates which show what they want to highlight.
    For example below returns of 2 shares with 2 different duration, deliberately taken at low of Corona market crash and their 52week high !
    Share of CompanyShare PriceCAGR Return
    ASIAN PAINTS30-Mar-2020 : 1535
    03-Jan-2022 : 3574
    58.4 %
    ESTER INDUSTRIES30-Mar-2020 : 24
    18-Apr-2022 : 180
    167 %
    In this table you may see the different end date, in a graph you may not !
    Also dates can be replaced by years as I will shamelessly do in the example below ! :)

  2. Very obvious in hindsight !
    Like most You-tube stock experts, I can easily sit back and tell you now where you should have invested 10 years ago, trust me you do not need to be an expert for this ! Its so obvious in hindsight !

Popular examples of Growth Stocks in last 10 years (quiet obvious now !)
Share of CompanyShare PriceCAGR Return
ASIAN PAINTS2012 : 350
2022 : 3300
25 %
PAGE INDUSTRIES2012 : 3000
2022 : 48800
32 %
ASTRAL LTD2012 : 28
2022 : 1800
52 %
PIDILITE INDUSTRIES2012 : 150
2022 : 2420
32 %
Data Source : Zerodha
Selling PAGE INDUSTRIES in 2014 to buy Car was my biggest mistake of Stock Investment !

Less known examples of Growth Stocks in last 10 years (quiet obvious now !)
Below Growth Stock which I found basis my stock valuing methods and got lucky ! Got lucky because I did not know / understand growth investing then. I bought and sold 4-5 times in these 10 years !
Examples of Growth Stocks MAZDA LIMITED is not the only stock, there were 4-5 more growth stocks in my Stock Portfolio, but I guess you got the idea !
If the company is growing, just hold to it for multi-bagger returns !
Let us understand 2 financial ratios of growth stocks now !

STOCK INVESTMENT VALUE INVESTING GROWTH INVESTING FINANCIAL PLANNING STOCK MARKET COURSE

Rishi Kashyap | | EDIT
Rishi Kashyap
8.7 K
X 2 financial ratios of growth stocks
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Once I understood that real wealth is created by investing in growth stocks, I tried to find a pattern in such growth stocks.
I read many investment books related with growth stocks, one of the best book worth mentioning here is "THE LITTLE BOOK THAT BEATS THE MARKET" by JOEL GREENBLATT.

While all financial ratios as explained in how to value stocks, still holds, these 2 important Financial ratios of Growth stocks, may improve your stock market probability of earning from 50-55% to perhaps 70-75%.
I already explained one in why do stocks rise and fall chapter of this share market tutorial.

Shares name mentioned in case studies are for educational purpose only and not to be taken as recommendations. Case study stocks may have been good investment at that moment of time which may have changed at the time of reading.
 
Please learn share market basics & how to value stocks before investing or consult a good Investment advisor.
Rishi kashyap is not a certified Financial advisor, please contact your Investment advisor if you do not know investing

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Different websites may have different procedures to calculate these ratios. As told before in Financial statement analysis, it is always advisable to verify Financial statement source and correctness of data yourself too !

How accurately you can predict the growth stocks future is equally important for the stock market probability of earning, along with these financial ratios.
Let us try to understand about Mr Warren Buffett investment strategy, how he knew about the future and where why he invested in certain companies  !

STOCK INVESTMENT GROWTH INVESTING VALUE INVESTING FINANCIAL PLANNING STOCK MARKET COURSE

Rishi Kashyap | | EDIT

tags  FINANCIAL PLANNING GROWTH INVESTING STOCK INVESTMENT STOCK MARKET COURSE VALUE INVESTING

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