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In today’s blog, we will talk about 3 growth stocks which can be looked at for next ten years.
Stock markets provide plenty of options, regardless of your investment horizon. It caters to investors seeking rapid growth stocks and less risky opportunities. If you want to see your money grow faster in the stock market, consider investing in growth stocks.
What exactly are growth stocks?
Growth stocks are stocks that are expected to grow at a faster rate than the market average. Growth investing can provide significant growth for your capital over time. However, a higher risk level is associated with investing in them.
How do you find growth stocks?
Growth stocks are ideal for investors who want to see their money grow faster. In addition, investors who intend to invest in growth stocks should be willing to take on more risk. If you believe you fall into the investor mentioned above category, the following tips will assist you in identifying growth stocks.
So, one must look at the Price to Earnings Ratio, Return on Equity, PEG Ratio and etc. while analysing and filtering high growth stocks.
How to evaluate growth stocks
Growth stocks also share some quantitative characteristics, which includes:
- Rising profit margins: The best growth stocks are companies with profit margins that increase over time. Profit margins that are negative but become positive while an investor holds the stock can result in significant share price increases, generating very high returns for the investor’s portfolio. Other rapidly growing companies are already profitable and still increasing their profit margins; these companies are lower-risk investments and are usually more suitable for new growth stock investors.
- Strong sales growth: The best growth-oriented companies also significantly increase their revenues over time since the only reliable way to grow profits for years is to grow revenues.
- The projected growth of earnings: Analysts projecting that a company’s earnings are likely to grow a positive sign. Analysts’ projections aren’t always accurate, but they help gauge market expectations.
- High returns on equity: ROE, or return on equity, equals net income as a percentage of shareholders’ equity. A company with a high or rising ROE relative to its competitors uses capital more efficiently to generate profits.
- Manageable levels of debt: Since it’s possible to achieve a high ROE by assuming high amounts of debt, it’s essential also to evaluate a company’s liabilities. The company’s ROE should not be overly influenced by its debt, and its debt levels should be comparable to those of competitors. The company’s historical performance should show a trend of the company keeping its liabilities at manageable levels.
Why should you buy growth stocks?
Increased profits – As previously stated, a growth stock can provide you with more capital growth than any other type of stock. This is because these businesses are growing much faster than the industry average. Investing in growth stocks can thus provide long-term and short-term growth for your money. In addition, given ideal market conditions and price growth, your money can double with compounding over time.
Beat inflation – Investing in growth stocks can help your money beat inflation. According to financial experts, the real growth of your money is the growth rate less inflation. That is, your money should grow significantly faster than inflation.
Are growth stocks risky?
Higher growth potential may also imply greater risk. As previously stated, this is also true for growth stocks. The strategy for growth companies would be aggressive growth, taking advantage of market conditions. This means that the company would pursue higher-risk strategies in order to achieve their aggressive growth objectives. As a result, it is classified as a risky investment.
Furthermore, growth companies rarely pay dividends. Instead, they re-invest that money to help the economy grow. This means that if the company experiences long-term depreciation, investors are likely to lose a significant portion of their money with no profit, including dividends.
Also, most growth stocks are issued by companies in the early stages of development. They are not large corporations with a track record of success. As a result, they are more volatile and vulnerable to market conditions. When market conditions are favourable, they can make a lot of money, but if the market turns bearish, they can lose a lot of money.
Now, Lets get started with the names of the stocks which can give high growth for the next 10 years:-
Central Depository Services Ltd.
It was founded in 1999 and is promoted by BSE Ltd. Through the IPO in 2017, BSE Ltd, which had 50.05% stake in CDSL, sold 26.05% of its holding to meet SEBI norms. It is one of the only two security depositories in India, apart from National Securities Depository Limited (NSDL). As a security depository, CDSL facilitates holding and transacting of securities in the electronic form. CDSL has a network of 588 DPs, operating from 21,739 sites with an ~70% market share.
As on 30th April 2022, CDSL had over 57,859 crore securities representing a total value of ₹37,29,608 crore. Additionally, the company had 6,50,35,578 investor accounts.
A depository is a facilitator for holding of securities in the dematerialised form and an enabler for security transactions. As a security
depository, CDSL facilitates holding and transacting of securities in the electronic form. The depository participants act as its
agents, offering depository services to the beneficial owner of the securities.
To get a detailed analysis of the company and to know why they are a part of this list, you can check out our Case Study on the same by clicking here.
Deepak Nitrite Ltd.
Deepak Nitrite (DN) is an integrated player in chemistries ranging from basic to speciality. The company has grown into one of India’s major chemicals companies, leading market positions in several niche product segments. It also boasts a strong client connect in varied end-user industries such as agrochemicals, rubber, pharmaceuticals, paper, textiles, detergent, colourants, petrochemicals and FSC. As of today’s date, this is Deepak Nitrite share price
APL Apollo Tubes Ltd.
APL Apollo Tubes Ltd. is one of India’s leading manufacturer of structural steel tubes and pipes in electric resistance weld (ERW) segment. It
has an installed capacity of 2.6 million tons per annum (MTPA), with its ten manufacturing plants located across India. Four plants
located in Northern and Southern India each, one each in Central and Western India. As of today, this is APL Apollo Tubes share price
The company works on a three level distribution network, wherein, at first it gives its products to ~800 distributors which further
distributes it to ~50,000 retailers that is carried forward by ~2,00,000 fabricators, architects and structural engineers. In case of
government orders, contracts are carried out by engineering, procurement and construction (EPC) contractors against advance
payment.
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Closure
Everything said and done, with the above list of high growth stocks, they face existential risks such as raw material price volatility, and demand slowdown, etc. that could give a sidekick to the expectations of good returns.
Until then, keep an eye out for the next blog and our midweek and weekend editions of “Trending Stocks and Stock Insights.” Also, please share it with your friends and family.
Happy Investing!
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