Explanation of how to invest in growth stocks in 2022 — DotBig Review
Growth stocks of assets of the businesses that are capable of performing impressive revenue increases. These increases must go at a much higher pace than the market average, or be more impressive than the performances of the company’s competitors. Usually, this is common for businesses that deliver authentic and unique products. Innovators and big participants that enter completely new industries to increase earnings are considered growth stocks as well.
Investing in such papers helps to increase gains significantly. In today’s review, we will try to explain why it is so, and how to take advantage of it.
Why buy them during the 2022 inflation
Inflation impacts businesses in two ways — it changes the prices of stocks and has an influence on the company’s financial performance. During such periods, shares might be often devalued, due to the increase in interest rates and a higher discount rate on future earnings. Nonetheless, growing companies should have enough capacity to be able to increase their revenue from a long-term perspective.
If you consider short-term strategies, growth stocks aren’t the securities you should buy during the inflation period. However, in the long run, this is a profitable option. From the long-term perspective companies and investors can mitigate the risk of poor stock valuation, caused by inflation, thanks to the fundamentals of the business.
To conclude this abstract, buying growth stocks during inflation might be profitable because the macroeconomic factors, supply chain issues, and other aspects decrease current stock prices. Unlike other businesses, growing companies have a good chance to recover from this in the long run. This brings attractive returns to investors.
The criteria to choose the best growth stocks
We now know why buying these securities is a good idea. However, how can you identify whether the company is growing or not? We have 3 clear criteria that characterize businesses with growth stocks:
- Look for businesses that will be able to satisfy market trends and demand despite the tough competition and macroeconomic factors.
- Among the chosen businesses, define the companies that possess some solid advantages.
- Finally, cross out from your list companies that access a small number of trended markets.
Make your research and find some participants to suit these characteristics. So far, you can take advantage of our top-3 growth stocks:
- Tesla. This brand remains one of the most popular automakers, manufacturing electric vehicles. Since the trend for eco-friendly mechanisms is on-demand, Tesla will grow. Its 36% increase in sales over the last 3 years is a good fundamental factor to prove this.
- Shopify. The coronavirus pandemic contributed to the growth of the e-commerce industry. Shopify is one of the best competitors in this area. Its stock is likely to grow in the future.
- Netflix. The industry of online streaming grew during the lockdown. Netflix, as one of the best-developing streaming services, managed to increase its sales by 20%.
To sum it up, DotBig analysts consider that investing in growth stocks during inflation is a good long-term strategy. These shares represent fast-developing brands that will grow and bring returns in the future.