Which investment strategy focuses on the long-term growth potential of companies?

The investment strategy that emphasizes the long-term growth potential of companies is growth investing. This approach seeks out stocks of companies that are expected to grow at an above-average rate compared to their industry peers or the overall market. Investors who pursue this strategy typically look for companies that are reinvesting their earnings to expand their business, innovate, or capture larger market shares, which can ultimately lead to significant price appreciation over time.

Growth investing often involves a higher level of risk, as these companies may not have consistent dividends or profits in the early stages of growth, but the emphasis is clearly on the potential for substantial capital gains. This strategy appeals to investors who are willing to hold their investments for the long term and are focused on the transformative potential of these companies in their respective sectors.