How I’d Find Growth Shares to Buy Today to Double My Money

Investing money in growth shares could be a profitable move. It may improve the chances of generating 100% returns over the long run.

Upwards momentum

Image source: Getty Images

Investing in growth shares has been a sound means of generating high returns for many years. Such companies offer the potential for strong profit growth that has often translated into a rising share price.

Of course, unearthing the best growth opportunities to buy now may be a tough task. The world economy faces a challenging future, but one that could be filled with opportunity.

By focusing on sectors with long-term growth appeal, and companies that have large competitive advantages, it is possible to earn 100%+ returns from an initial investment in the coming years.

Doubling an investment in shares

While doubling the value of an investment in growth shares may sound unlikely at first glance, the stock market’s track record shows that it could be very achievable. For example, indexes such as the FTSE 100 and S&P 500 have delivered annualised total returns that are in the high-single digits in recent decades. Assuming a similar return in future would mean that an investment in the stock market that tracks the wider index could double in value within a decade.

Of course, buying companies with strong growth characteristics may help to generate higher returns than the stock market. Investors who buy such companies at fair prices may enjoy impressive returns that provide them with a significantly improved financial outlook.

Unearthing the best growth shares

Finding companies that can deliver higher growth rates than the wider stock market is a challenging task at the present time due to the uncertain economic outlook. However, by focusing on industries benefitting from growth trends, it is possible to unearth attractive growth stocks. For example, sectors such as healthcare and online retail could benefit from long-term trends such as an ageing global population and a shift in consumption from in-store to online.

Within appealing growth sectors, it could be a good idea to focus on companies that have a clear competitive advantage versus their peers. For example, they may have a unique product that can provide them with higher margins and a more resilient sales profile in the coming years. Similarly, businesses with strong brand loyalty may become more dominant in growth industries. This may lead to a rising market share and higher profitability.

Building a portfolio of stocks

As ever, diversification is crucial when building a portfolio of growth shares. Some businesses will inevitably fail to live up to expectations. Therefore, it is important to have a wide spread of holdings to limit the impact of a small number of failures on a wider portfolio.

Furthermore, buying stocks with appealing growth prospects when they trade at a fair price could be crucial to doubling an initial investment. Even if a stock has an attractive growth outlook, there should also be a margin of safety so there is scope for capital growth to match its rising bottom line.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

Target. Stand out from the crowd
Dividend Stocks

RRSP Pension: 2 Dividend Stocks to Buy on the Latest Dip

These high-yield TSX stocks look cheap right now for RRSP investors.

Read more »

bulb idea thinking

The Smartest TSX ETF to Buy With $1,000 Right Now

Forget the TSX 60 or the TSX Composite. I prefer the TSX Dividend Aristocrats.

Read more »

Canada Day fireworks over two Adirondack chairs on the wooden dock in Ontario, Canada

CPP Benefits Not Enough? This Top Dividend Stock Can Help Fund Your Retirement

Canadian retirees can look to supplement their CPP payout with quality dividend stocks such as Headwater Exploration.

Read more »

grow dividends
Stocks for Beginners

Why Cargojet Stock Is Surging Past 52-Week Highs

Cargojet (TSX:CJT) stock surged by 17% after a new deal was announced, with upgrades coming in as well for the…

Read more »

protect, safe, trust

It’s Time to Defend Your Wealth: 3 Top Stocks to Help Keep What’s Yours

For those looking to defend your wealth against what appear to be robust oncoming macro headwinds should consider these stocks.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Safe and Sound Stocks for Canadians: My Top 5 Choices

Five safe stocks to buy on a market pullback.

Read more »

Financial technology concept.

Couche-Tard Stock: Today Is a Huge Buying Opportunity

Alimentation Couche-Tard (TSX:ATD) stock looks like a steal after its latest unwarranted plunge into a correction again.

Read more »

A stock price graph showing growth over time
Metals and Mining Stocks

Why Cameco Stock Soared 23% This Year

Cameco stock continues to ride high on strong supply/demand fundamentals and growing momentum in the nuclear industry.

Read more »