Is there a way to figure out the value of a common stock experiencing supernormal growth?

Question

I have the formula for valuing a stock experiencing supernormal growth for a period of time, but then returns to normal growth. How do you figure it out on a BAII Plus calculator? The dividend goes up, but then assuming that the stock is sold at the end of the period with supernormal growth. Any help is greatly appreciated.

Answer 1

Peter ... supernormal growth always comes to an end.

That it will is as predictable as tomorrow's sunrise. What isn't predictable is how soon it will happen.


Play around with multiple time frames, figure out the value for each, and then make some arbitrary guesses as to the likely distribution of those time frames and look at some weighted averages and distributions.


you'll be surprisingly far ahead of anyone else.

Not correct, but less wrong. Which is good enough for market traders.


GL


{Btw, what a great and thoughtful question -- five stars -- best I've seen tonight.}

Answer 2

read the following books,
1) the intelligent investor
2) security analysis

you will find the answer in them.