Dictionary Home »
Invest » emerging growth stock
emerging growth stock investment & finance definition
The common stock of a relatively young firm that is operating in an industry that has very good growth prospects. Although this kind of stock offers unusually large returns, it is very risky because the expected growth may not occur or the firm may be swamped by the competition.
Keys to spotting a good emerging growth stock
Keep these points in mind:
- High percentage of management ownership. If management has a vested interest, its commitment to succeed will be all the stronger.
- What stage is the overall industry in?
- More important, where is the target stock focusing its efforts within the industry?
- What will be the industry leader's reaction to another player?
Steven Flagg, Senior Vice President—Investments, UBS PaineWebber, Mount Kisco, NY
Learn more about emerging growth stock