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.
[click to enlarge]