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Every Wednesday, we publish our “Investor Toolkit” series on TSI Network. Whether you’re a new or experienced investor, these weekly updates are designed to give you specific investment advice. Each Investor Toolkit update gives you a fundamental piece of investing strategy, and shows you how you can put it into practice right away.
Today’s tip: “There are 2 fundamental things you should know about making growth stock picks.”
Growth stocks are companies whose earnings growth has been above the market average, and is likely to remain above average. It is often the case that these firms pay small dividends or none at all. Instead, they invest their cash flow in promoting their growth.
Although these stocks can be highly volatile, they often make good long-term investments. They may be well-known stars or quiet gems, but they do share one common attribute—they are growing at a higher-than-average rate within their industry, or within the market as a whole, for years or decades.
Here are 2 fundamental factors that will help you make winning growth stock picks—and avoid mistakes that can kill your profits:
Our advice: If you invest as we advise—by spreading your investments out across the five main economic sectors, investing mainly in well-established companies and staying away from stocks in the broker/public relations limelight—you will automatically have some growth stocks and some value stocks.
That helps you achieve good results while reducing volatility. But in the end, we think the relative amounts you invest in growth and value stocks should be secondary to your portfolio’s diversification and overall investment quality.
If you are looking for advice on the best growth stocks – the ones that will grow into value stocks – you really should have a subscription to Stock Pickers Digest.
You can save $50.00 off the regular rate with our introductory subscription (exclusively for new subscribers). The latest issue gives you our very latest analysis—and clear buy/sell/hold advice—on 20 stocks that may be suitable for the part of your portfolio you devote to aggressive investing. Click here to take advantage of our special subscription offer.One Comment
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