High growth companies normally have high multiples

Long_Equity
2025-01-22

High growth companies normally have high multiples.

I created this table to show the relationship between growth and multiples👇

In short, a PE ratio of 50 requires a 20% earnings growth over 5 years to turn that multiple from 50 -> 20.

FYI, I use FCF yield - not P/E.

$.SPX(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $.IXIC(.IXIC)$ $NASDAQ 100(NDX)$ $Invesco QQQ(QQQ)$ $.DJI(.DJI)$ $FT Vest U.S. Equity Deep Buffer ETF - January(DJAN)$

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Two things you can do to become a better investor:

1. Limit the number of companies you own

2. Limit how frequently you trade

This forces you to:

1. Only own your best ideas

2. Accept there will always opportunities you miss out on

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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Comment（4）

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  • SuperDuper1
    ·2025-01-22
    你的表格显示了t=5时的市盈率，随着CAGR的增加，市盈率呈线性下降，这完全没有意义。当前市盈率反映了未来的增长，对于不同的增长率，当前市盈率不可能是恒定的。
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  • Erihui
    ·2025-01-22
    很棒的文章，你愿意分享吗？
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  • setia100
    ·2025-01-22
    好建议👍
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  • KSR
    ·2025-01-22
    👍
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