At this point in life, you might decide to choose some aggressive stocks to add to your investment portfolio. In college, your finance professor probably cautioned against investing too much in aggressive stocks, because as fast as they can rise they can also plummet. You understand that, but at your age, even if you lose a significant amount of money, you have time to make it back. Knowing how to choose a stock for aggressive growth takes some research and planning, but if you do it right, you can make a lot of money in a relatively short time.
Examine growth rates of several possibilities. To be considered aggressive, a stock's average growth rate should exceed 10 percent every year. In addition, there should be a minimum of 15 to 20 percent gain over a consecutive three-year period in the past five years.
Do a fundamental analysis on each of the targeted companies. This type of analysis examines financial information about each company. You can find this information on each company's website and by contacting each company and requesting the information. It is also important to look at each company's predictions of its growth potential. A company that has stayed ahead of the pack for the past few years is probably going to continue that trend.
Watch the performance of your targeted aggressive stock a few days to a couple of weeks before investing your cash. It is generally better to be safe than sorry, but waiting too long may cost you money if you miss the opportunity to buy low and sell high. Watching it for a few days to a couple of weeks will give you a good idea of how aggressive it is currently.
Examine international trends. International trends can have an impact on domestic stock values. For instance, if you are considering investing in a precious metal stock that appears to be aggressive in growth and the price of metal suddenly plummets in Europe, the stock may slow to a crawl. Before investing, examine the potential that international markets may have on it.
Be ready to sell. Buying stocks with aggressive growth can give you a significant return on your money, but it can also cost you dearly. Forbes.com recommends keeping an eye on your aggressive-growth stocks and selling immediately if they dip below the 50 percent mark.
Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.