Growth stocks are those companies expected to grow sales and
earnings at a faster rate than the market average.
Growth stocks often look expensive, trading at a high P/E
ratio, but such valuations could actually be cheap if the company
continues to grow rapidly which will drive the share price up.
Investment in growth stock is risky because they do not pay
dividend
Stocks are valued based on the net present value of the
underlying company’s future cash flows. The discount rate used to
calculate that net present value is benchmarked to interest rates.
So, when interest rates go lower, so does the discount rate. The
lower the discount rate, the higher the net present value
.A drop of 150 to 200 basis points in real long-term interest
rates, which has occurred in recent few years, can impact the price
as much as 50% as in the case of amazon