Speculative-growth stocks can inspire dreams of wealth--and nightmares of poverty. These companies are often new ventures selling something people want, generating rapid revenue growth, but incurring high expenses as they strive to become a permanent fixture of the corporate landscape. One might be the next Microsoft MSFT. Or the next Atari.
Their defining characteristics are rapid revenue growth but slower or spotty earnings growth--strong sales, in other words, but a lagging bottom line. In fact, many speculative growth companies lose money--lots of it.
That's not much inducement to invest. Still, corporate America's future heavyweights and best investments may lurk in this high-risk, high-reward corner of the market. It's possible to curb some of the risk, too. To do that, we'll take a look at Yahoo YHOO, the World Wide Web portal that was one of the hottest Internet stocks of the 1990s.
Is Sales Growth Outpacing Asset Growth? >>