Growth investing is a strategy where an investor seeks out companies demonstrating signs of high earnings that are well above the average rate compared to other firms in their industry and within the overall market. Investors interested in these stocks focus on capital appreciation and future earnings potential, and often choose investments that they believe will outperform income stocks, which are thought to exhibit slow growth. While income stocks pay out earnings to their shareholders in the form of dividends, growth stocks reinvest the earnings into the company to achieve further growth.
Tech companies and emerging markets are commonly associated with growth investing, as they are often priced higher than their earnings or book values.
A company’s financial statements may refer to multiple types of stock, including authorized, outstanding, float and restricted shares. If a company issues more shares, its outstanding shares will increase. The outstanding shares comprise of float stock and restricted stock
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