What are growth stocks?

Growth stocks are defined as companies that investors expect to grow their top line by 20% or more in the foreseeable future. According to Brian Feroldi, this anticipated rapid growth in revenue is a significant portion of the company's current value. Growth stocks often have higher price-to-earnings (PE) ratios if they have earnings at all, as many of the fastest-growing companies do not have earnings by design and thus lack a PE ratio. The valuation of growth stocks is based heavily on expected future performance, which introduces a high degree of volatility and risk 1.