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is growth trajectory. Not every company in an industry has the same potential to grow. If we expect our startup to double revenue each year for the next several years, we’d expect a higher multiple than a more mature company that might be doing well to grow 10% year over year.
Patrick Vernon • Venture Capital Strategy: How to Think Like a Venture Capitalist
Substantial profits from the purchase of secondary companies at bargain prices arise in a variety of ways. First, the dividend return is relatively high. Second, the reinvested earnings are substantial in relation to the price paid and will ultimately affect the price. In a five-to seven-year period these advantages can bulk quite large in a well-s
... See moreBenjamin Graham • The Intelligent Investor, Rev. Ed (Collins Business Essentials)
they’ve been promised when they retire. So what happens? The cash goes into very conservative investments—certificates of deposit, U.S. Treasury bills and notes, municipal bonds, and the like—that tend to be safe and stable. They may not lose value over time, but they aren’t going to increase in value very quickly either. If the company’s stock app
... See moreJack Stack, Bo Burlingham • A Stake in the Outcome
Rule 2: A rational investor should pay a higher price for a share, other things equal, the larger the proportion of a company’s earnings paid out in cash dividends or used to buy back stock.