We had previously discussed on the concept of Value Stocks. Through this post we would like to explain growth stocks and also the difference between value and growth stocks.

Growth Stocks as the name implies would have shown a good growth in the past and will have exciting prospects ahead. These stocks would have a high sales growth, increasing NPM, low to medium Interest Coverage Ratio. These stocks will have ample opportunity to grow within a particular sector. You cannot call a stock which is very low in market capitalization which has doubled its sales for one-two years to be a growth stock. Thats because increasing sales from say 3 crore levels to 6 crore may be easy. But whether the company has the right kind of management, potential and the strategy in place to grow further determines whether it is a good stock or not. A company can be already an industry leader and can be a growth stock. Microsoft during last decade was a classic example of being an industry leader and also a growth stock. Even though they have huge market share of operating system, they go on to expand the market size itself to grow.

Most of the stocks that we have recommended are growth stocks only. These stocks will not have too much of a correlation with the market. But at the end of the year these stocks will outperform the index by a big margin. In fact stocks like Pidilite, Whrilpool, Asian Paints, Everonn, Genesys which we have recommended have done exceedingly well despite the fact that markets have not done as well in the last three months. Typical cases of growth stocks!