Quote:
Originally Posted by WSSix
That makes sense. You need substance and not just fluff since we aren't gambling here. The history of the stock value and the company can be used to determine if indeed the company is having both top and bottom line growth, correct? Because as Brian mentioned, if it only had top line and no bottom line, something's amiss and I'd imagine the stock wouldn't do well throughout history. At least I would think that's correct.
I guess I'm just trying to tie the simple approach of looking at a stock's history to be a good indicator of its potential as a viable investment to a deeper understanding of what or why its price history is what it is.
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Yes --- growth in both top and bottom line is pretty darned important... and the stock price "normally" will reward those companies that can show growth in both those areas. Newer companies don't "normally" -- note I have to say normally lest someone find one company to use as an example to show I'm wrong
- don't pay dividends etc because they don't have that long history of steady earnings. Higher P/E ratios are sometimes given to companies that can show they have outsized growth... because folks are willing to pay more for them and hope that they grow into the higher P/E.