S-curves: Investment implications

In our previous story, we read about the factors that boost the S-curves for companies. In this story, we will see the investment implications when it comes to the S-curves. An investor looking to buy and hold high-quality stocks over a long time period needs to be able to differentiate between businesses which can deliver longevity of consistently healthy free cash flows and those that run a high degree of uncertainty in their fundamental prospects. As highlighted in chart 'Fair value P/E for companies with high and limited longevity', even if two companies have the same slope of the S-curve (i.e., rate of growth of fundamentals), greater longevity

This article was originally published on January 18, 2022.