What is "growth stock"

n. (context business finance English) A corporate equity investment instrument which usually does not pay substantial dividends but which increases in value as the company grows, and which typically appeals to investors who have a long-term perspective.

n. stock of a corporation that has had faster than average gains in earnings and is expected to continue to

In finance, a growth stock is a stock of a company that generates substantial and sustainable positive cash flow and whose revenues and earnings are expected to increase at a faster rate than the average company within the same industry. A growth company typically has some sort of competitive advantage (a new product, a breakthrough patent, overseas expansion) that allows it to fend off competitors. Growth stocks usually pay smaller dividends, as the company typically reinvests retained earnings in capital projects.