Growth Company

A growth company... grows.

Now, most companies want to grow, but some are better at it than others. If Mary Ellen creates a business selling accessories for old rotary phones, her business might not grow all that fast. It's more likely to fall flat on its face, yeah?

Growth companies don't just get into the right industries; they also take money from profits and reinvest it back in the company to create new products, open new offices, buy new companies, and basically pay for all the stuff that makes a company grow into a huge business.

What these companies don't do is pay lots of dividends—they're too wrapped up in expanding the company. When you invest in growth companies, you may not get money every year from the stock, but you may see the value of the stock go up really fast.

Or, at least, that's what you hope will happen.