Can Growth Stocks Stay Hot in 2014?

By Travis Hoium – Jan 17, 2014 at 1:54PM

2013 was all about multiple expansion, but in 2014 growth stocks have to prove they're worth the high price investors are paying, and that presents both opportunity and challenges.

The stock market in 2013 was defined by little profit improvement but big-time stock moves. Companies like Tesla Motors (TSLA 6.24%), Amazon.com (AMZN 1.26%), and 3D Systems (DDD 5.30%) all saw their stocks soar despite having little to no profit. Eventually, the optimism that drove growth stocks higher will require earnings to follow suit.

Fool contributor Travis Hoium thinks 2014 will be more about growth stocks proving they're worth a premium price than it will be about increasing expectations. The challenge for investors is that a single earnings miss or bad press release can send a highflying stock crashing back to earth. That's a reason to be at least a little cautious this year.

Fool contributor Travis Hoium is short shares of Amazon.com. The Motley Fool recommends and owns shares of 3D Systems, Amazon.com, and Tesla Motors and has the following options: short January 2014 $20 puts on 3D Systems. We Fools may not 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.