Topic: Growth Stocks

Here’s how to pinpoint the best growth stocks to invest in right now

top growth stocks

If you are looking for the best growth stocks to invest in right now, focus on shares that meet these key criteria

Successful investors know the value of the best growth stocks to invest in right now and the potential boost they give to long-term returns. After all, by definition, growth stocks are those that have risen at a higher-than-average rate within their industries, or within the market as a whole. That can be over a period of years, or even decades.

Growth investing focuses on trying to identify and buy rising stocks when they have further growth ahead.

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Find the best growth stocks to invest in right now and you can enjoy dividends in addition to growth

As with conservative dividend-paying stocks, dividend growth stocks offer investors a measure of security. Dividends, after all, are much more stable than earnings projections. More important, dividends are impossible to fake—either the company has the cash to pay them or it doesn’t.

However, it’s important to avoid judging a company based on the fact that it pays a dividend. Nor should you be tempted solely by a high dividend yield (the percentage you get when you divide a company’s current yearly payment by its share price).

That’s because high yield can sometimes be a danger sign rather than a bargain. For example, a dividend stock’s yield could be high simply because its share price has dropped sharply (since you use a company’s share price to calculate yield). That drop may signal investor anticipation of coming bad news.

As well, you should always remember that while growth stocks hold the potential for greater gains than conservative selections, they typically expose you to a higher level of risk—even if they are dividend-paying stocks.

That’s why we look beyond dividend yield when making investment recommendations and look for dividend stocks that have established a business and have at least some history of building revenue and cash flow.

Use these four strategies to spot the best growth stocks to invest in right now if you want to hold tech firms

  • Buy multi-product companies: Focus on tech stocks that have some existing or soon-to-be-released products and avoid one-hit wonders.
  • Diversify: invest carefully and buy, say, 3 to 5 tech stocks instead of just one. Gains on your winners can help offset any losses you may have.
  • Focus on up-and-coming technologies: You need to know how technology is changing to do this.
  • Look for earnings: A perpetual money loser will eventually go broke, but if it makes even a little money, it can stay in business and perhaps reap the bonanza of a new product.

Key factors to watch for when investing in top growth stocks

There are several considerations that go into a successful growth investing strategy. Still, many investors overlook a number of important factors that can lower their risk.

In the end, there’s no such thing as risk-free investing. The tips below for lowering your growth investing strategy risk have long been part of the Successful Investor approach.

  • Balance your cyclical risk
  • Be skeptical of companies that mainly grow through acquisitions
  • Don’t overindulge in aggressive investments
  • Keep an eye out on a growth stock’s debt
  • Keep stock market trends in perspective
  • Look for growth stocks that have ownership of strong brand names and an impeccable reputation
  • The best long-term growth stocks should have the ability to profit from secular trends

Don’t sell the best growth stocks to invest in right now too soon

Experienced investors can tell you that some of their best stock picks started going up out of proportion to what they expected, and kept outperforming for years. By the time the first significant “dip” or setback comes along in a stock like this, it may have tripled.

Remember, no one can predict which stocks will be average performers, which will be losers, and which ones will turn into the superstocks that wind up rising five-fold, 10-fold or more. You may avoid some temporary losses if you sell every stock you own that goes up faster than you guessed. But do that, and you will also sell any superstocks you stumble upon, often when they are just getting started. That could mean that your growth stock investing strategy never pays off as well as it might.

After all, you need a few superstocks during your investing career, to make up for the inevitable losers.

Above all, when a stock you own is unexpectedly strong, resist any impulse you feel to sell, even if you like the idea of “nailing down a profit.” Instead, look at it closely. See if you can find any good reason to sell, apart from the fact that it’s beating your expectations. If you can’t find any good reason to sell, hang on to it. Maybe your expectations are just too low.

Use our three-part Successful Investor approach as you look to add the best growth stocks to invest in right now to your portfolio

  1. Hold mostly high-quality, dividend-paying stocks.
  2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
  3. Downplay or stay out of stocks in the broker/media limelight.

What industries do you focus on for long-term growth investing?

How do you find investments with long-term growth potential?


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