Explosive Growth Stocks Versus Value Stocks

Whether you’re just learning to invest, or you consider yourself a pro, it can be difficult trying to identify the best explosive growth stocks.

So, how do you find these explosive growth stocks?

First, you must understand what growth stocks are, and how they work…

What Are Growth Stocks? 

Growth stocks are exactly what they sound like…

Stocks that propose a high potential for growth, faster than the markets average growth rate. This could be determined by measuring an index such as the S&P 500).

Companies that are considered growth stocks, are expected to grow in revenue at a much faster pace than the market average as well. You may have heard of a few…

• Tesla (TSLA)

• Apple (AAPL)

• Netflix (NFLX)

• Amazon (AMZN)

One main characteristic of explosive growth stocks is their potential for long-term growth. This is due to their ability to accelerate future growth by continually reinvesting their profits.

However, not all growth stocks offer long-term growth. I’ll get to that momentarily…

First, it’s important you understand the difference between growth stocks and value stocks.

The Difference Between Growth Stocks and Value Stocks

Investors will buy growth stocks on the expectation the stock price will rise as the company experiences explosive growth.

Yet, when it comes to price expectations, it can be difficult to note the difference between growth stocks and value stocks.

Growth Stocks:

• Growth stocks should show potential for future and long-term growth

• These will be companies that are growing rapidly and have captured mainstream attention

• The company is focused on long-term growth, so it will reinvest its profits to keep expanding

Value Stocks:

Investors tend to look at value stocks as bargains, but they are not always cheap stocks.

Value stock prices tend to have lower prices because they have been undervalued by the market for several reasons.

However, like explosive growth stocks, investors will buy value stocks because of their potential for growth from their undervalued price.

And just like with growth stocks, not every value stock will be a winner.

So, what is the difference between growth stocks and value stocks?

Value stocks tend to trade below what they are really worth, potentially handing out sizable returns to investors.

Growth stocks are expected to outperform the overall market due to their potential for future and long-term growth.

In short, you’re either buying something because it’s on sale, or because it will appreciate in value.