Why Growth Stocks Get a Premium – They are Rare

Interesting chart via JPMorgan showing how few stocks in the S&P 500 have even a 15% annual revenue growth rate.   Those that do, get quite a premium.  While this is a reflection only on the largest companies in the index, we of course see a similar premium (if not much larger) within the Russell 2000.

  • “Our analysis of S&P 500 companies shows investors are willing to pay for outsized revenue growth as it suggests more sustainable long term EPS growth…Only 9% of companies in the S&P 500 are growing revenue above 15% and they trade at a ~60% premium to the rest of the index,” they write.

Via BusinessInsider

About Mark Hanna 543 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

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