HI @saintex Close to the end of the book now. The valuation model is in Lesson 9 of the book - Valuation is in the eye of the tech stockholder. In this chapter it has the following compounding table:
In simple, if you review and determine the current high growth rate is sustainable (what % of Total Addressable Market company currently has been achieved and what remains), then buying at 20x PE is a no brainer over a ten year period, compared to a value stock at 15x PE.
This is extended to companies with no Earnings. The four questions to ask for no earnings companies is as follows: 1. Are there any public companies with similar business models that are already profitable? 2. If the company as a whole isn't profitable, are there segments (products or Growth Curve Initiatives) within the business that are? 3. Is there a reason why scale can't drive a business to profitability? 4. Are there concrete steps that management can take to drive company to profitability?
Only three chapters to go. Next chapter is the Hunt for Dislocated High Quality (DHQ's) Stocks.
