Buy Software Firms That Are Building a Moat

摘要

Wtien it comes to growth stocks, a quick glance at a company's price/earnings (P/E) ratio is not enough to tell if a stock is "cheap." Investors are willing to pay a much higher valuation for a business with extremely predictable earnings and a high growth rate. To assess the predictability of future earnings, I use three key criteria First, is the revenue recurring? Second, is the competitive advantage sustainable? Third, will profit margins fatten as sales increase?