growth company

noun
Updated on: 16 Nov 2017

Definition of growth company

:a company that grows at a greater rate than the economy as a whole and that usually directs a relatively high proportion of income back into the business

Recent Examples of growth company from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'growth company.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

First Known Use of growth company

1959


Financial Definition of GROWTH COMPANY

growth company

What It Is

Growth companies are fast-growing, higher-risk companies. They tend to be young. Their stocks offer a higher chance of higher returns and a higher chance of losses.

How It Works

The nature of a company's business determines many of the characteristics of its stock, especially for growth companies. For example, blue-chip stocks are stocks issued by high-quality, large companies and generally have steady dividend payments. Their values don't "jump around" as much as shares of smaller, riskier companies like growth companies, generally speaking, and so conservative investors who like dividend payments and not much risk tend to avoid growth companies.

Growth companies are generally riskier than other types of companies, but their stocks also offer a chance at very high returns. These returns are often in the form of capital gains rather than dividends. Tech companies are generally good examples of growth companies -- they tend to reinvest all excess cash into their businesses and rely heavily on research and development of products that can be very lucrative but easily outdated.

Why It Matters

Deciding whether to buy stocks of growth companies, or which growth stocks to buy requires you to consider your goals in life, your age, your cash needs, future cash needs you might have (retirement, college, etc.), your tax situation, the nature of your other investments, and how much risk you're willing to take. For those willing to tolerate the risk, the rewards can be quite large (and the losses can be quite large).


Law Dictionary

growth company

legal Definition of growth company

see company

Seen and Heard

What made you want to look up growth company? Please tell us where you read or heard it (including the quote, if possible).

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!

WORD OF THE DAY

to praise usually to excess

Get Word of the Day daily email!

Test Your Vocabulary

Find the Cousins

  • a-large-tree-with-many-branches
  • Which pair shares a common word ancestor?
True or False

Test your knowledge - and maybe learn something along the way.

TAKE THE QUIZ
Syn City

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!