“Growth stock” investing was a new idea that arose in the 1930s. Thomas Rowe Price was one of the founders of the theory. He publicly make the case for it in 1939.
Price recognized early in his career that a few companies had an advantage of stable long-term growth. They could plow earnings back into the company and grow for decades. Those were the companies he wanted to own.
He explained in a series of articles appropriately called “Picking ‘Growth’ Stocks.” He defined it like this:
“Growth stocks” can be defined as shares in business enterprises which have demonstrated favorable underlying long-term growth in earnings and which, after careful research study, give indications of continued secular growth in the future.
A decade later he refined his definition in a follow-up article: Continue Reading…
Buy the Book: