| The only thing that concerns a smart investor is | | | | of the factors are equal, a slow growth rate does |
| 'growth'. In the stock market, the share prices | | | | not really prove to be very impressive. In fact a |
| and the respective company's worth are directly | | | | minute relative change in the growth rate makes |
| proportional to each other. The investor should | | | | a whole lot of a difference to the investor in term |
| therefore always go for companies that are | | | | of his estimated returns. |
| constantly rising in worth. It is a stock market | | | | The sustainability factor - the investor will do |
| golden rule that the company which manifests | | | | better if he looks beyond the growth estimates. |
| persistent growth will automatically provide | | | | The sustainability factor should be of more |
| generous stock market returns. | | | | concern than the appealing estimates because it is |
| But it is not always advisable to solely | | | | the determinant and logical factor which ensures |
| concentrate on the growth rate projections. This | | | | great returns. The tech bubble has been the |
| is because if due to any unforeseen circumstance, | | | | outcome of such myopic vision. However alluring |
| the stock market happens to lose faith in the | | | | the growth projections might be, it is very |
| prospects of the said company, it will be a | | | | important to figure out if the company has any |
| disaster for the investor. But growth stock | | | | competitive advantages. |
| companies are generally found to possess a | | | | The investor should also be careful from being |
| sound market reputation due to their persistent | | | | too much obsessed with the growth factor. He |
| performance and they are further aided with a | | | | must not end up paying a fortune for it. This has |
| support of sizeable capital and are equipped with a | | | | often been noticed and that is why the growth |
| strong and competent managerial team. A growth | | | | stocks are at times believed to be over-rated. |
| stock investor is therefore saved from the | | | | Good research and logical calculations will enable a |
| market fluctuations to a great extent. | | | | sensible investor to uphold even a marginal profit |
| An investor just has to look at three fundamental | | | | in a state where the growth is consistent. A |
| conditions before ascertaining the credibility of the | | | | smart investor will always select a growth stock |
| growth stock: | | | | which is undervalued or rather fairly priced. The |
| A sound growth rate - if the growth rate of the | | | | equation of a Discounted Cash Flow can help the |
| company is fast it is even better. When the rest | | | | investor to the fair value of a growth company. |