Growth stocks are COMMON STOCK equities in companies perceived by investors as having above-average currentand projected-earnings growth. These stocks typically have very high price-earnings ratios and very low DIVIDEND yields; they have higher BETA COEFFICIENT ratios and are riskier INVESTMENTS, with greater upside and downside potential. The counter-investment strategy is value stocks. These stocks generally have low price-earnings ratios, higher dividend yields, and have a market capitalization (price times the number of shares outstanding) equal to or less than the value of the company’s assets. There are several ways a company can be a proven growth company, and several more in which it can be perceived by investors as having growth potential. If a company has an existing record of quarter-to-quarter (or year-to-year) above-average increases in sales, earnings, or gross PROFIT margins, investors will project these increases over many quarters or years and bid up the price of the stock well above current values in comparison to other investments. Companies without a verifiable record may project that their growth in sales or earnings will dramatically increase. They may also have investment analysts, bankers, or other promote their stock. Sometimes, because they are in the same industry or specific manufacturing or service category as other companies that have experienced superior growth in recent years, they feel they “deserve” a high price/earnings ratio or even a high price without any current earnings or substantial sales. Many U.S. DOT-COMS rationalized their high prices based on this reasoning. The reward for investors in a company that is proven (or widely perceived) as a growth company is that the stock commands higher price/book, price/earnings, and price/sales ratios than its peers. The risk for investors in buying a growth stock is that the projection may be wrong, the premium paid for projected growth is withdrawn, and the stock falls substantially. More RISK is entailed buying smaller companies that have no current earnings or high debt. Growth companies have arisen in many fields, from retailing to technology, tobacco to perfume. In some cases the company developed a concept or idea that set it apart from existing COMPETITION; or it became the most efficient and drove out or bought up the competition; or it invented an entire new field and was the first (or best of the first group of companies) to succeed in it, dominating the new industry. Examples of large, successful companies considered to be proven growth companies (i.e., those that have demonstrated above-average growth in sales and earnings over many years) are Intel, Microsoft, Philip Morris, and Wal-Mart. Jerry and Jesse Rosenthal