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Era of Great Change. At the turn of the century, railroads were the great growth stocks; after World War I, retail-store chains took off; and utilities were the growth stocks of 1929. Chemicals, liquors, oils, motion-picture companies, airlines—all at one time or another have been the darlings of Wall Street. Now many of them have become sedate blue chips, and no longer show the growth and earning potential that the Street demands. After a ten-year rise in which their market value almost trebled, many blue chips seem to have temporarily exhausted much of their growth potential. Since January, the Dow-Jones industrials have dropped 7.2%, while ten representative glamour and growth stocks have gone up 17%.
Today's growth stocks may claim their title for many reasons. Most of them are found in new or rapidly changing indus tries that are either riding new trends or testing new frontiers of knowledge: electronics and missiles, which have spawned some of the best performers; recreation and leisure, where such firms as Brunswick Corp. (bowling equipment) and NAFI Corp. (pleasure boats) have profited by the move to the suburbs and extra leisure time; drugs, where an outpouring of new products has brightened the future of such firms as Schering and Merck; vending machines, which promise to bring a new era of merchandising; and foods, where General Foods, for example, has been a leader in the revolution in the kitchen.
Inventive Brains. The hottest growth stocks are those that have the extra ingredient of glamour: a unique or fascinating product, or even the possibility of developing one. Born of an age of rockets and missiles, their companies bear such intriguing names as Itek (information classification), Haloid Xerox (office copying), Transitron (transistors), Ampex (tape recorders). Ionics (electrically charged filters that desalt water), and High Voltage Engineering (electronu-clear machines).