Growth stocks are among the most popular stocks to buy for investors. These high flying stocks typically outperform the market and most benchmark funds. The stocks don’t normally pay dividends, instead opting to use profits to boost the company’s growth through acquisitions and other areas of growth.
With no dividends to reward shareholders, growth stocks are worth holding when the returns are good. The problem is knowing when to sell these high growth stocks in exchange for something else. Signs of a time to sell could be the end of a streak of certain double digit returns, declining revenue growth, declining earnings, a scale back on unit expansion, or lowering guidance.
The following three stocks meet criteria listed above and now fall out of the stocks to buy category. While each could return to its high growth days, the risks here outweigh the reward. Avoid these three stocks and look for other growth stocks to buy instead.