Growth Investing Explained: How to Find High-Growth Stocks
Growth investing means buying companies that are expanding their revenue and earnings quickly, betting that rising profits will drive the share price higher — even if the stock already looks expensive today. It's the counterpart to value investing: you pay up for growth, aiming for bigger long-term gains and accepting more volatility along the way.
What is growth investing?
Growth investing targets companies growing faster than the market — in revenue, earnings, or both — often in expanding industries like technology or healthcare. Investors accept higher valuations (and higher volatility) because they expect rapid future growth to justify today's price. The focus is on the trajectory of the business, not whether it's cheap right now.
The metrics that matter for growth
- Revenue growth — how fast sales are rising, year over year and over several years.
- Earnings (EPS) growth — whether profit is growing, not just sales.
- Forward estimates — what analysts expect next year and beyond.
- Margins — whether the company keeps or improves profitability as it scales.
- PEG ratio — valuation relative to growth, to check you're not overpaying.
How to find high-growth stocks (step by step)
- Screen for strong growth — for example a high growth grade or double-digit revenue growth. Our free high growth stocks screener uses a growth grade.
- Check that profits, not just sales, are growing — and that margins are holding up.
- Look at the runway — is the market the company sells into still expanding?
- Mind valuation — use the PEG ratio so you don't overpay for growth that's already priced in.
- Confirm overall quality with the ST Score, which blends growth with financial strength and the other factors.
The risks of growth investing
- Higher valuations — growth stocks can fall hard if growth slows even slightly.
- More volatility — prices swing more on earnings and sentiment.
- Execution risk — fast growth is hard to sustain; disappointments are punished.
- Rate sensitivity — richly valued growth stocks often react strongly to interest-rate changes.
Growth vs value investing
Growth investing buys expanding companies and bets on rising earnings; value investing buys cheap, established companies and bets on a re-rating. Growth tends to shine in strong, low-rate markets; value often holds up better when rates rise or the economy slows. Many investors blend both.