A company whose earnings are growing at a faster rate than other companies in the industry or the boarder economy. During periods of slow activity, such a company continues to prosper because its performance is not much correlated to the economic cycle. A growth company has a good demand on it product or service, making its profits sufficient for internal reinvestment. Furthermore, a growth company typically has stable or improving profitability trend, which contributes to its future growth. As its profits increase, the company’s share price also improves, reflecting growth effects. As a result, a growth company will have a high return on equity (ROE).
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