The Problem With Growth Stocks

In the preceding video, Fool.com analyst Austin Smith emphasizes how important it is to be able to recognize and differentiate between a good company at a fair price and and a great company at an outrageous price. By their very nature, markets will inevitably and eventually adjust for overpricing, and when this happens, the correction can deliver a major blow to shareholders. This is something to keep in mind with stocks such as LinkedIn (NYSE: LNKD  ) , Zillow (NASDAQ: Z  ) , and Chipotle (NYSE: CMG  ) -- all impressive companies with great performance -- but it's imperative to keep in mind how quickly prices can turn when investing in growth stocks.

This is true even for giants such as Amazon.com (NASDAQ: AMZN  ) , which everyone knows is the big bad wolf in the retail world right now. But at such a sky-high valuation, there's worry that it will be Amazon's share price that gets knocked down instead of competitors'. We'll tell you what's driving Amazon's growth, including how to know when to buy and sell, in our premium research report on the company. You'll also be covered with a full year of free analyst updates to keep you informed as the story changes, so don't miss out -- click here now to get started.

Austin Smith has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com, Chipotle Mexican Grill, LinkedIn, and Zillow. Motley Fool newsletter services recommend Amazon.com, Chipotle Mexican Grill, LinkedIn, and Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2046774, ~/Articles/ArticleHandler.aspx, 12/22/2014 2:39:28 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement