Some of the best growth stocks, especially those occupying a specialist niche, trade at a high price-to-earnings ratio. ![]() Accordingly, investors are usually hoping to make a profit on capital gains in the short term, with dividend income a potential outcome once major growth has been established. Instead of paying out dividends, any profits generated are ploughed back into the business to help accelerate growth. Growth stocks are shares in companies that are expected to grow much faster than either the average growth of a company within the wider market or within its specific sector. However, this could also make them excellent buying opportunities on the dip, despite the attached risk. The Ukraine War, rolling Chinese pandemic lockdowns, and now the expected global slowdown, are contributing to sizeable share price falls among many of even the best ASX growth stocks. Much of the financial stress can be attributed to global geopolitical events. However, it’s worth noting these figures are some way off the worse scenarios playing out across Europe, the US, and the UK. Australian CPI inflation now stands at 6.9%, while the RBA cash rate target has risen to 3.85%. Financially, the twin ghouls of rising inflation and increasing interest rates are both making it much harder to achieve economic growth.
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