‌

Why Long-Term Investors Value Growth Stocks

Growth stocks represent the companies that are expected to increase profits or revenues more than the market average. These stocks typically don't pay dividends, however, investors who have a high level of risk tolerance may select them since their returns from capital appreciation can be exponential in the long run.

‌

Steps to Locate Quality Growth Stocks

1. Narrow down to prospective industries

Some growth stocks can perform better than others due to their presence in fast-growing industries. They might also have unique products or services as a competitive advantage, which may allow them to grow faster than their peers.

You can view the Industrial Heatmap on Webull at the bottom of the “United States” tab on the Market page. The larger the market cap, the larger the size of the square. The greater the increase or decrease of the market cap, the darker the corresponding color.‌

‌

2. Check the background of the leadership team

Growing companies may be too young to have a critical performance history to share. Studying its leadership team can offer you some hints. Executives with a proven track record of success tend to be more visionary and may benefit the company.

Choose a symbol and go to the details page. Click Company>Profile>Key Executives to find its leadership team and their detailed information.

‌

3. Heed strong EPS growth

The basic idea is that if the company has shown significant growth over a long period in the past, it has the potential to continue to move forward.

EPS growth, which illustrates the growth of earnings per share over time, helps identify stocks that are increasing or decreasing in profitability. Investors can compare a company's EPS growth with that of its past, or that of its peers in the industry.

‌

Choose a symbol and go to the details page. Click Company>Financials> EPS to check its historical EPS.

‌

4. Be sensitive to High Return on Equity

ROE (Return on Equity) signals how much the stockholders earned for their investment in the company. As a general rule of thumb, an ROE of 15% to 20% is considered good. Less than 5% ROE is considered low.

‌

‌

Choose a symbol and go to the details page. Click Company>Financials>Peer Comparison to check the company’s ROE ranking.

‌

Other Ways to Invest in Growth Stocks

Like every investment, investing in growth stocks involves risk. Because growth stocks typically pay small or no dividends, investors only profit from a long-term investment if the company performs well. They may face losses when the company performs poorly. Therefore, investors may seek diversified ETFs or mutual funds to mitigate the risk.

‌

How to Find Growth Stocks on Webull

Filtering sector, ROE, EPS, dividends, and other indicators such as last price can narrow the range of growth stocks that may interest you with Webull Screener. You can then refine your investment goals by the above characteristics.

‌

The Bottom Line

The potential to harvest market-beating returns has made growth stocks welcome in long-term investments. For investors who don't have much time to do in-depth research but are interested in growth stocks, Growth ETFs can also be an option. You can also tap here to view the Technical Analysis Top List to find inspiration.

‌

Data disclaimer: Technical analysis data and indicators are provided by Trading Central. Trading Central is a separate entity, unaffiliated with Webull Financial. Webull is not responsible for the accuracy or completeness of data provided by Trading Central. All data are provided for informational purposes only, and are not intended, and should not be construed, as investment advice or recommendations.