My main intention with my portfolio is for fairly conservative growth. This will chiefly be fuelled through dividend reinvestment as well as, of course, any--probably fairly modest--capital gains. As such, my focus will tend towards fairly large cap or mid-cap companies.
However, having youth on my side I thought I may as well experiment with a growth stock or two in order to understand better the risks and potential benefits this approach offers. My first test is going to be with the technology company Seeing Machines.
Who are Seeing Machines?Seeing Machines develops technology which helps read the face of drivers--faceAPI they call it--and can tell when drivers are getting sleepy by registering small eye movements called "microsleeps". They chiefly cater to the mining industry, installing their machines in the large vehicles used to dig up and move the mined material.
However, it does not take a great deal of imagination to see the potentially larger applications such technology could have. The Holy Grail would no doubt be the ability to have the technology integrated into domestic cars, but a more immediate and obvious application would be in large passenger and cargo vehicles on the road.
FinancesThe company--being a growth play--does show that it is only in 2013 that it started to bring in income. This is, I understand, fairly commonplace for such companies early in their lives but for someone accustomed to looking at the financial material of FTSE 100 and FTSE 250 companies it is a little disconcerting.
Nonetheless, income is income. What is more, their revenue has been fairly progressively growing (though by no means is revenue growth a perfect progression). Furthermore, analysts appear confident that this growth will continue into 2014 and 2015. This strikes me therefore as a fairly friendly growth stock.
The risks associated with investing in such a company are, of course, far more considerable than in a "stable" and "mature" FTSE 100 giant. However, looking at their technology and the potential it offers is very encouraging. With vehicles becoming more intelligent with every generation, intelligence like this seems very attractive indeed.
Growth stocks part of your portfolio?
Do you allow "pure" growth stocks into your portfolio or do you find them too risky? How do you tend to judge the value of growth stocks?