Multiple Expansion: A Tale of Two Markets

  • The NAVY BLUE BARS show the price-to-sales ratio of stocks in 2010 by decile, from least to most expensive
  • The LIGHT BLUE BARS show the price-to-sales ratio of stocks TODAY by decile, from least to most expensive
  • While stocks are generally more expensive today than in 2010, the market’s most expensive stocks trade at a staggering 32x revenues today – a 400% increase from where they were in 2010
  • Consistent with common-sense and as documented in our papers “From Brilliant to Brain Dead” and “IPO Stocks are the New Staples”, paying 32x sales for a company is a highly speculative endeavor
  • For investors looking for high quality firms trading at reasonable prices that offer healthy income, see our recent papers on high quality midcaps and consumer staples 

Price to Sales Multiple by Decile 2010 vs Today

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Kailash Capital and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.