A high-growth stock that is expected to substantially rise in value and provide its holder with handsome performance over a foreseen period in the future. By nature, a performance stock usually pays a meager dividend or no dividend at all, as its performance would be sufficient to compensate the investor (in terms of the value growth over time).
Firms that have such stocks tend to re-invest earnings (retained earnings), to finance strong growth potential, rather than pay dividends (as the opportunity costs for dividends payment would be very high).
Performance stocks are also known as growth stocks.
