Growth Stock Selection

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What You’ll Learn

1. ✅ Understand what growth investing is and why it can deliver outsized returns
2. ✅ Identify high-growth companies using key metrics (revenue growth, TAM, market share)
3. ✅ Evaluate if a growth stock’s price is justified or overvalued
4. ✅ Distinguish between quality growth and hype/bubbles
5. ✅ Use Maverick to find emerging growth opportunities
6. ✅ Build a growth-focused portfolio that balances risk and reward
7. ✅ Manage the volatility that comes with growth investing

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What is Growth Investing?

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The Philosophy

“Pay a fair price for exceptional growth. The compounding will reward you handsomely.”

• Exceptional growth rates (20-50%+ annually)
• Large addressable markets (TAM)
• Disruptive products or business models
• Strong competitive advantages (moats)
• Long runways for expansion

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Historical Performance

• From 1927-2020, growth stocks outperformed value by ~30% in bull markets
• Top tech companies (FAANG): 300-1,000%+ returns over decade
• Amazon (1997-2023): +180,000% (turned $10k into$18 million)
• Apple (2003-2023): +55,000% (turned $10k into$5.5 million)
• Netflix (2002-2021): +41,000% (turned $10k into$4.1 million)

• High volatility (50-80% drawdowns during bear markets)
• Many growth stocks fail (Pets.com, WeWork, etc.)
• Requires stomach for wild swings
• Can underperform for years during value cycles

• Peter Lynch - Fidelity Magellan Fund, 29% annual returns for 13 years
• Cathie Wood - ARK Invest, focused on disruptive innovation
• Philip Fisher - Pioneered growth investing, influenced Warren Buffett
• Thomas Rowe Price Jr. - Founded T. Rowe Price, focused on growth stocks

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Growth vs. Value Investing

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Key Growth Investing Metrics

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Metric #1: Revenue Growth Rate

Revenue Growth = ((Current Year Revenue - Prior Year Revenue) / Prior Year Revenue) × 100

• 20%+ annually: Solid growth
• 30-50%+ annually: Exceptional growth
• 100%+ annually: Hyper-growth (often early-stage)

• 2023 Revenue: $500 million
• 2024 Revenue: $700 million
• Growth = (($700M -$500M) / $500M) × 100 = 40%

• Revenue growth is harder to manipulate than earnings
• Shows real customer demand for products/services
• Leading indicator of future profitability

Hey Maverick, I'm looking for high-growth opportunities with strong revenue momentum.

Can you screen for:
- Revenue growth: 30%+ annually (last 3 years)
- Revenue: over $100 million (not too early-stage)
- Market cap: $500M - $50B (mid-cap sweet spot)
- Sector: Tech, Healthcare, Consumer Discretionary, or Clean Energy

Give me 10-15 stocks with brief explanations of their growth drivers.

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Metric #2: Earnings Growth Rate

Earnings Growth = ((Current Year EPS - Prior Year EPS) / Prior Year EPS) × 100

• 15%+ annually: Good growth
• 25%+ annually: Excellent growth
• 50%+ annually: Exceptional (may not be sustainable)

• 2023 EPS: $2.00
• 2024 EPS: $2.80
• Growth = (($2.80 -$2.00) / $2.00) × 100 = 40%

• Shows the company is not just growing revenue, but converting it to profit
• Indicates improving efficiency and operating leverage
• Directly drives stock price appreciation

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Metric #3: PEG Ratio (Price/Earnings-to-Growth)

PEG Ratio = P/E Ratio / Earnings Growth Rate

• Stock has P/E of 40
• Earnings growing at 50%/year
• PEG = 40 / 50 = 0.8

• PEG < 1.0: Undervalued relative to growth (good buy)
• PEG = 1.0: Fairly valued
• PEG 1.0-2.0: Slight premium (acceptable for quality growth)
• PEG > 2.0: Overvalued (paying too much for growth)

“A fairly priced growth stock should have a PEG ratio of 1.0. Under 1.0 is cheap, over 2.0 is expensive.”

• P/E: 60, Growth: 30%, PEG: 2.0 → Expensive

• P/E: 35, Growth: 40%, PEG: 0.875 → Good value for growth!

• P/E: 25, Growth: 50%, PEG: 0.5 → Exceptional value!

Hey Money Monty, what's the PEG ratio for [TICKER]?

Calculate:
1. Current P/E ratio
2. Expected earnings growth rate (next 3-5 years)
3. PEG ratio
4. Is this stock fairly valued, undervalued, or overvalued for a growth stock?

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Metric #4: Total Addressable Market (TAM)

• A company with $1B revenue in a$5B market has limited upside (already 20% share)
• A company with $1B revenue in a$500B market has huge runway (only 0.2% share)

• Stripe (payments): TAM ~$2 trillion (global payments market)
• Airbnb (lodging): TAM ~$1.8 trillion (global travel/hospitality)
• Shopify (e-commerce): TAM ~$5 trillion (global e-commerce)

• TAM should be at least 10× current revenue (room to grow)
• Ideally 50-100× current revenue (massive runway)
• Growing TAM is even better (market itself expanding)

• Company has $500M revenue
• TAM is $50 billion
• Currently 1% market share
• If they reach 10% share (realistic for category leader) → $5B revenue (10× growth)

Hey Maverick, what's the Total Addressable Market (TAM) for [TICKER]'s business?

Can you estimate:
1. The total market size (TAM) for their product/service
2. Their current market share (%)
3. How fast is the overall market growing?
4. What market share could they realistically capture in 5-10 years?
5. What would their revenue be at that market share?

I want to understand the growth runway.

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Metric #5: Rule of 40

Rule of 40 = Revenue Growth Rate (%) + Profit Margin (%)

• ≥ 40: Excellent (healthy balance of growth and profitability)
• 30-40: Good (acceptable)
• < 30: Poor (either too slow growth or too unprofitable)

• Revenue growth: 50%
• Profit margin: -5% (losing money)
• Rule of 40: 50 + (-5) = 45 ✅ (Acceptable, growth justifies losses)

• Revenue growth: 15%
• Profit margin: 30%
• Rule of 40: 15 + 30 = 45 ✅ (Acceptable, profitable and growing)

• Revenue growth: 10%
• Profit margin: -15%
• Rule of 40: 10 + (-15) = -5 ❌ (Red flag! Slow growth AND losing money)

Hey Money Monty, can you calculate the "Rule of 40" for [TICKER]?

1. What's the revenue growth rate (last 12 months)?
2. What's the profit margin (or EBITDA margin)?
3. What's the Rule of 40 score?
4. For a SaaS/software company, is this healthy?

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Metric #6: Customer/User Growth

• Number of active users (for consumer apps)
• Number of paying customers (for B2B)
• Customer retention rate (% of customers who stay)
• Net Dollar Retention (revenue from existing customers over time)

• Spotify: 220M users (2020) → 615M users (2024) = 180% growth
• Shopify: 1M merchants (2019) → 4.4M merchants (2024) = 340% growth

• Revenue growth often follows user growth
• High user growth = product-market fit
• Shows momentum and adoption

• User/customer growth ≥ revenue growth: Healthy (monetization may improve later)
• User growth < revenue growth: Mixed (growing revenue per user, but slowing adoption)
• Accelerating user growth: Exceptional (hitting inflection point)

Hey Maverick, what's [TICKER]'s user/customer growth trend?

Can you find:
1. Total users/customers (current and 2-3 years ago)
2. Growth rate per year
3. Customer retention/churn rate (if available)
4. Net Dollar Retention (for SaaS companies)

Is the user base growing, stable, or shrinking?

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The Growth Stock Selection Process

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Step 1: Identify Growth Themes and Sectors

• Cloud computing (AWS, Azure, Google Cloud)
• Software-as-a-Service (Salesforce, Adobe, ServiceNow)
• Cybersecurity (CrowdStrike, Palo Alto Networks)
• Semiconductors (NVIDIA, AMD, TSMC)
• E-commerce (Amazon, Shopify, MercadoLibre)

• Gene therapy (CRISPR, Vertex)
• Weight loss drugs (Novo Nordisk, Eli Lilly)
• Medical devices (Intuitive Surgical)
• Health tech (Teladoc, Dexcom)

• Electric vehicles (Tesla, Rivian)
• Streaming (Netflix, Disney+)
• Sports betting/gaming (DraftKings, Flutter)

• Solar (First Solar, Enphase)
• Wind (Vestas, Orsted)
• Energy storage (Tesla, Fluence)
• EVs and charging infrastructure

• Digital payments (PayPal, Block/Square)
• Buy-now-pay-later (Affirm, Klarna)
• Crypto exchanges (Coinbase)
• Neobanks (SoFi, Chime)

Hey Maverick, what are the hottest growth themes RIGHT NOW in the market?

Can you identify:
1. 5-7 major growth themes or trends (AI, clean energy, etc.)
2. Why each theme has strong tailwinds
3. 2-3 leading stocks in each theme
4. Which themes are early-stage vs. mature

I want to find emerging growth opportunities before they're mainstream.

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Step 2: Screen for Growth Candidates

Hey Maverick, I'm building a growth portfolio. Please screen for stocks with:

GROWTH CRITERIA:
- Revenue growth: 25%+ annually (last 3 years)
- Earnings growth: 20%+ annually (or path to profitability if not yet profitable)
- Market cap: $2B - $100B (avoid micro-cap and mega-cap)
- Trading volume: Above average (liquid)

QUALITY FILTERS:
- Gross margins: 50%+ (shows pricing power)
- Debt-to-equity: <1.5 (manageable debt)
- Insider ownership: >10% (management has skin in the game)

SECTORS:
- Tech, Healthcare, Consumer Discretionary, Clean Energy, Fintech

Can you suggest 15-20 stocks that meet these criteria with explanations?

Hey Maverick, I'm interested in [SPECIFIC THEME: AI / Cloud / EVs / Fintech / Biotech].

Can you find 8-10 stocks that:
1. Are pure plays on this theme (core business, not side project)
2. Have revenue growth of 30%+ annually
3. Are gaining market share
4. Have strong competitive positions
5. Market cap between $1B and $50B

Explain why each is well-positioned for this theme.

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Step 3: Deep Dive on Top Candidates

Hey Money Monty, I'm considering [TICKER] as a growth investment. Please analyze:

1. GROWTH METRICS:
   - Revenue growth: Last 3 years and projected next 3 years
   - Earnings growth: Last 3 years and projected next 3 years
   - User/customer growth (if applicable)
   - Market share trends (gaining or losing?)

2. PROFITABILITY PATH:
   - Is the company profitable? If not, when is it expected to be?
   - Gross margins, operating margins, net margins
   - Trend: Improving or deteriorating?

3. BUSINESS QUALITY:
   - What's their competitive advantage (moat)?
   - Who are the main competitors?
   - What makes this company special?

4. FINANCIAL HEALTH:
   - Cash position and burn rate (if unprofitable)
   - Debt levels (manageable?)
   - Cash flow: Positive or negative?

5. VALUATION:
   - P/E ratio (if profitable) or P/S ratio (if not)
   - PEG ratio
   - How does valuation compare to peers?

6. RISKS:
   - What could derail the growth story?
   - Competitive threats?
   - Regulatory risks?
   - Execution risks?

7. OVERALL ASSESSMENT:
   - Buy, hold, or avoid?
   - If buy: What's the upside/downside scenario (next 3-5 years)?
   - Position size recommendation (% of portfolio)

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Step 4: Evaluate the Growth Narrative

• Amazon (2000s): “E-commerce will replace physical retail”
• Netflix (2010s): “Streaming will replace cable TV”
• Tesla (2010s-2020s): “EVs will replace gas cars”
• NVIDIA (2020s): “AI will transform every industry”

1. Is the trend real and sustainable? (Not just hype)
2. Is the TAM large enough? (Can support 10× growth)
3. Does this company have a sustainable advantage? (Or will competition crush margins?)
4. Can they execute? (Strong management, proven track record)
5. What’s the bear case? (Why might this fail?)

Hey Maverick, I'm excited about [TICKER]'s growth story:

[Describe the narrative in 2-3 sentences]

Can you help me validate this thesis?
1. What evidence supports this growth narrative?
2. What are the key risks or counterarguments?
3. How dependent is this on a single trend/technology/customer?
4. What would prove this thesis wrong in the next 12 months?

I want to make sure I'm not falling for hype.

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Step 5: Check Valuation (Avoid Overpaying)

• ❌ P/E over 100 (unless hyper-growth like 100%+ revenue growth)
• ❌ P/S over 20 (paying 20× annual sales)
• ❌ PEG over 3.0 (paying 3× too much for growth)
• ❌ Market cap bigger than realistic revenue potential (in 10 years)
• ❌ Stock up 500%+ in 12 months with no fundamental change

• Rivian IPO: $100B market cap,$0 revenue
• Snowflake: P/S of 100+ (paying 100× sales)
• Many SPACs: Trading at 10-20× projected revenue (years away)

• ✅ PEG under 2.0
• ✅ P/S under 15 (for high-growth SaaS)
• ✅ P/E under 50 (for profitable growth companies)
• ✅ Reasonable path to 3-5× revenue in 5-10 years
• ✅ Market cap is < 20% of TAM

Hey Money Monty, I'm concerned about overpaying for [TICKER]. Can you check:

1. What's the current P/E (or P/S if unprofitable)?
2. What's the PEG ratio?
3. How does valuation compare to peers?
4. How does valuation compare to its own historical average?
5. What would be a fair price to pay for this growth?
6. At current price, what's the risk/reward (upside vs. downside)?

Be brutally honest - am I overpaying?

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Step 6: Assess Management Quality

• Founders often have longer-term vision
• More willing to sacrifice short-term profits for long-term growth
• Examples: Bezos (Amazon), Musk (Tesla), Zuckerberg (Meta), Huang (NVIDIA)

• Management owns significant stock (>5% of company)
• Aligned incentives (they win when shareholders win)
• Less likely to make short-sighted decisions

• Consistently hit or beat guidance
• Successfully launched new products
• Scaled the business effectively

• Smart acquisitions (not overpaying)
• Investing in R&D and growth
• Not wasting money on stock buybacks when stock is overvalued

• CEO or CFO changes multiple times in 3 years
• Signals internal problems

• Executives selling large portions of stock (>50%)
• May indicate they think stock is overvalued

• Consistently miss guidance
• Announce big initiatives that never materialize
• Lost credibility with investors

Hey Maverick, can you evaluate [TICKER]'s management team?

1. Who is the CEO and what's their background?
2. Is this a founder-led company?
3. How much stock does management own?
4. What's their track record (hitting targets, executing strategy)?
5. Any recent insider buying or selling?
6. Overall, is this a management team I can trust to execute on growth?

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Building a Growth Portfolio

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Portfolio Construction Principles

• Large-cap companies (>$50B)
• Consistent 15-25% growth
• Profitable with strong cash flow
• Lower risk, lower upside
• Examples: Microsoft, Apple, Adobe, Visa

• Mid-cap companies ($5B-$50B)
• 25-50% growth
• Approaching profitability or recently profitable
• Moderate risk, moderate upside
• Examples: CrowdStrike, Datadog, Shopify, DraftKings

• Small-cap companies ($1B-$5B)
• 50-100%+ growth
• Often unprofitable (investing for growth)
• High risk, high upside
• Examples: Depends on market (emerging companies)

• 40% mature = stability and steady growth
• 40% mid-stage = sweet spot (growth + manageable risk)
• 20% early-stage = moonshot potential (but limited downside)

• 35% Technology (cloud, software, semiconductors)
• 25% Healthcare/Biotech (drugs, devices, health tech)
• 20% Consumer Discretionary (e-commerce, streaming, EVs)
• 10% Financials (fintech, payments)
• 10% Clean Energy / Other Themes

• 10-15 stocks
• Each position: 5-10% of portfolio
• Max position: 10%

• 15-20 stocks
• Each position: 4-7% of portfolio
• Max position: 10%

• 8-12 stocks
• Each position: 7-12% of portfolio
• Max position: 15%

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Sample Growth Portfolio ($10,000)

• 10% Microsoft (MSFT) - Cloud + AI = $1,000
• 10% Apple (AAPL) - Services growth + ecosystem = $1,000
• 10% Visa (V) - Digital payments = $1,000
• 10% Alphabet (GOOGL) - Search + Cloud + AI = $1,000

• 10% CrowdStrike (CRWD) - Cybersecurity = $1,000
• 10% Shopify (SHOP) - E-commerce platform = $1,000
• 10% DraftKings (DKNG) - Sports betting = $1,000
• 10% Datadog (DDOG) - Cloud monitoring = $1,000

• 7% SoFi (SOFI) - Fintech = $700
• 7% Rivian (RIVN) - EV maker = $700
• 6% [Your pick: emerging AI/biotech/clean energy company] = $600

• Blended revenue growth: ~25-30% (weighted average)
• Mix of profitable and unprofitable (investing for growth)
• Diversified across sectors
• Mix of established (MSFT, AAPL) and emerging (SOFI, RIVN)

• Bull market: 25-40% annual returns
• Bear market: -30% to -50% drawdowns
• Long-term (10 years): 15-20% annualized (if you can stomach volatility)

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Alternative: Growth ETF Portfolio

• 50% QQQ (Invesco QQQ ETF) - Nasdaq-100, tech-heavy growth
• 30% ARKK (ARK Innovation ETF) - Disruptive innovation
• 20% VONG (Vanguard Russell 1000 Growth) - Broad growth

• Instant diversification (100+ stocks)
• Professional management (especially ARKK)
• Lower single-stock risk
• Easy to manage

• Can’t outperform (just match the growth indices)
• Higher fees for ARKK (0.75% vs. 0.20% for QQQ)
• Less control over holdings

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Managing Growth Stock Volatility

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Expect Wild Swings

• Netflix (2011): -80% (over 12 months)
• Tesla (2019): -60%
• NVIDIA (2018): -50%
• Amazon (2000-2002): -95%
• Entire Nasdaq (2000-2002): -78%
• Entire Nasdaq (2022): -33%

• 20-30% pullbacks are NORMAL in growth stocks
• 40-50% pullbacks happen every few years
• 60-80% crashes happen during major bear markets

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How to Stay Calm During Volatility

• Growth stocks swing 5-10% per day on no news
• Daily checking = emotional roller coaster
• Check weekly or monthly instead

• Is revenue still growing?
• Is the user base still expanding?
• Is the long-term thesis intact?

• You own $9,000 in growth stocks +$1,000 cash
• Market crashes 30%
• Your $9,000 portfolio →$6,300
• Deploy $1,000 cash at 30% discount
• Total: $7,300 (vs.$7,000 if fully invested)

• Set stop-loss at 40-50% below purchase price
• If stock drops that much, fundamentals likely broken
• Exit and redeploy to better opportunity

• Buy at $100
• Stop-loss at $50
• If it hits $50, auto-sell
• Prevents 90% wipeouts (like Pets.com, WeWork, etc.)

• Start with $1,000 each in 10 stocks
• One stock (Stock A) 5× in 2 years → now $5,000
• Other 9 stocks flat → still $9,000 total
• Total portfolio: $14,000
• Stock A is now 35% of portfolio (risk!)

• Trim Stock A from $5,000 to$1,500 (sell $3,500)
• Reallocate $3,500 to other positions or new opportunities
• Lock in gains, reduce concentration risk

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Growth Investing Mistakes to Avoid

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Mistake #1: Chasing Hype (FOMO)

• Stock is up 300% in 6 months
• Everyone talking about it (Reddit, Twitter, CNBC)
• You buy at the top out of FOMO
• Stock crashes 70% in next 6 months

• GameStop (2021): $500 →$40 (-92%)
• Zoom (2020): $588 →$70 (-88%)
• Peloton (2020): $162 →$8 (-95%)

• Never buy a stock just because it’s “hot”
• Wait for pullbacks (20-30% dips) to establish positions
• Ask yourself: “Would I buy this if nobody was talking about it?”

Hey Maverick, [TICKER] is up [X%] in the last [timeframe] and everyone's talking about it.

Can you help me separate hype from reality:
1. What's driving the price surge (fundamentals or speculation)?
2. Has the business actually improved, or just the stock price?
3. How does current valuation compare to historical and peers?
4. What's the risk that this is a bubble?

Be brutally honest - should I wait for a pullback or is this justified?

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Mistake #2: Ignoring Profitability Path

• Company growing revenue 100%/year but losing money
• You assume “they’ll figure out profitability later”
• Years pass, still unprofitable, cash running out
• Stock collapses

• Uber (unprofitable for 10+ years, finally profitable 2023)
• WeWork (never achieved profitability, collapsed)
• Many 2020-2021 SPACs (still burning cash, stocks down 80-90%)

• Ask: “How and when will they become profitable?”
• Check cash burn rate vs. cash on hand (runway)
• Look for improving unit economics (gross margins)
• If no clear path to profitability in 3-5 years, avoid

Hey Money Monty, [TICKER] is growing fast but not profitable. Can you assess:

1. How much cash are they burning per quarter?
2. How much cash do they have on hand?
3. How many quarters of runway before they need to raise more money?
4. What are their gross margins (improving or stable?)
5. What's the path to profitability (timeline and strategy)?

Is this sustainable or risky?

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Mistake #3: Overconcentration

• You find one growth stock you love
• Put 30-50% of portfolio in it
• Stock crashes 60%
• Your entire portfolio down 20-30%

• 50% in Tesla (2021)
• Tesla drops 70% (2022)
• Portfolio down 35%
• Takes years to recover

• Max 10-15% per stock
• 15-20 stocks minimum for growth portfolio
• Even your “highest conviction” pick: Max 15%

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Mistake #4: Falling in Love with Stocks

• You bought a stock and it’s done well
• You’re emotionally attached
• Stock becomes overvalued (PEG > 3, P/E > 80)
• You refuse to trim/sell
• Stock crashes, you give back all gains

• Have sell disciplines:
  • Trim when PEG exceeds 3.0
  • Trim when position exceeds 20% of portfolio
  • Sell if fundamentals deteriorate
• Remember: You married your spouse, not your stocks

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Mistake #5: Panic Selling During Corrections

• Market corrects 20-30%
• Your growth stocks down 40-50%
• You panic sell to “stop the bleeding”
• Market recovers, you miss the rebound

• Sell growth stocks in March 2020 COVID crash
• Miss the 100%+ recovery over next 12 months

• Don’t sell on price alone
• Ask: “Have the fundamentals changed?”
• If thesis intact: Hold or buy more
• If thesis broken: Then sell

Hey Sage, my growth portfolio is down 35% in this correction. I'm tempted to sell everything.

Can you help me think through this:
1. Historically, what % of 30-40% corrections fully recovered within 2 years?
2. For my holdings [list them], have fundamentals actually deteriorated?
3. What's the base case for recovery over next 1-3 years?
4. Should I hold, sell some, or actually buy more?

I need rational perspective, not emotional reaction.

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Using Maverick for Growth Investing

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Best Prompts for Finding Growth Stocks

Hey Maverick, run me a weekly screen for new high-growth opportunities:

GROWTH:
- Revenue growth: 30%+ annually
- Earnings growth: 25%+ annually (or path to profitability)
- Market cap: $2B - $50B

QUALITY:
- Gross margins: 60%+ (strong unit economics)
- Positive free cash flow OR cash runway of 2+ years
- Insider ownership: >5%

THEMES:
Focus on: AI, Cloud, Cybersecurity, Fintech, Healthtech, Clean Energy

Avoid:
- Recent IPOs (<6 months, too volatile)
- Companies with deteriorating margins

Give me 10-12 stocks with growth narratives.

Hey Maverick, what's the next BIG growth theme that's still early?

Can you identify:
1. 3-5 emerging themes that have 10-year tailwinds
2. Why each theme is positioned to explode
3. 3-4 leading companies in each theme
4. Which companies are best positioned (competitive advantage)
5. Rough valuations (are they buyable or too expensive?)

I want to find the next cloud computing / AI / EV BEFORE it's mainstream.

Hey Maverick, find me stocks that are at inflection points (about to break out):

CRITERIA:
- Revenue growth ACCELERATING (faster each quarter)
- Recent earnings beat + raised guidance
- New product/service launch gaining traction
- Institutional buying increasing
- Stock consolidating after pullback (20-30% off highs)

Market cap: $1B - $30B

These are stocks where momentum is building but haven't gone parabolic yet.

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Growth Analysis Prompts

Hey Maverick, I want to fully evaluate [TICKER] as a long-term growth investment:

SECTION 1: GROWTH DRIVERS
- What's the primary growth driver? (product, market, technology)
- How sustainable is this growth (next 5-10 years)?
- What's the TAM and current market share?

SECTION 2: COMPETITIVE POSITION
- Who are the main competitors?
- What's this company's competitive advantage?
- Is the moat widening or narrowing?

SECTION 3: FINANCIAL TRAJECTORY
- Revenue and earnings growth trends
- Path to profitability (if not yet profitable)
- Margins: Improving or compressing?
- Cash burn vs. cash on hand

SECTION 4: MANAGEMENT & EXECUTION
- Quality of management team
- Track record of execution
- Insider ownership and recent trades

SECTION 5: VALUATION
- Current P/E (or P/S) and PEG ratio
- How does it compare to historical and peers?
- Fair value estimate

SECTION 6: RISKS
- Biggest threats to the growth story
- What could go wrong?
- Competitive, regulatory, execution risks

SECTION 7: VERDICT
- Buy, hold, or avoid
- Upside/downside scenario (3-5 years)
- Suggested position size (% of portfolio)

Give me the full picture so I can make an informed decision.

Hey Maverick, I'm deciding between [TICKER1], [TICKER2], and [TICKER3] for a growth position.

Compare:
1. Revenue and earnings growth rates
2. TAM and market share opportunities
3. Competitive positioning
4. Valuation (PEG ratios)
5. Risk levels
6. Management quality

Rank them 1-3 with reasoning. Which is the best growth investment right now?

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Growth Investing Success Stories

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Case Study #1: Amazon (1997-2023)

• E-commerce will replace physical retail
• Started with books, expanding to everything
• Revenue growing 800%+ annually
• Unprofitable but investing for long-term

• Price: $18/share
• Market cap: ~$400M
• P/E: N/A (unprofitable)
• P/S: ~8× (seemed expensive!)

• 2000-2002: Crashed 95% ($100 →$5) during dot-com bust
• Many sold, assuming it would fail
• Revenue kept growing 20-40%/year
• Eventually profitable (2003)
• Expanded to cloud (AWS), Prime, devices

• 2023 price: ~$3,200/share (split-adjusted)
• Return: 180,000%+
• $10,000 →$18 million

• Great growth stories take decades to play out
• Unprofitability early is OK if path is clear
• Volatility is the price of admission (-95% drawdown!)
• Long-term winners compensate for all the losers

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Case Study #2: Netflix (2002-2021)

• DVD-by-mail disrupting Blockbuster
• Subscription model (recurring revenue)
• Growing 50%+ annually
• Small TAM initially (just DVD rentals)

• Saw streaming as future of entertainment
• Massive TAM (replace cable TV)
• Invested billions in content
• Revenue accelerated to 30-50%/year

• 2011: Crashed 80% ($300 →$53) after price increase backlash
• Most investors sold
• Company recovered, kept growing
• 2021 peak: $700/share

• 2002-2021 return: 41,000%+
• $10,000 →$4.1 million

• Best growth companies pivot and evolve (DVD → Streaming)
• 80% drawdowns are survivable if fundamentals intact
• TAM expansion unlocks next growth phase
• High conviction required to hold through volatility

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Case Study #3: NVIDIA (2015-2024)

• Dominant in gaming GPUs (60% market share)
• Expanding to data centers
• Revenue growing 15-25%/year (solid but not spectacular)

• GPUs perfect for AI/machine learning
• Data center revenue accelerating
• New TAM: $1 trillion (AI infrastructure)

• ChatGPT launches, AI explodes
• NVIDIA chips essential for AI training
• Revenue growth: 100-200%+ annually
• Became key picks-and-shovels play for AI

• 2015 price: ~$5/share (split-adjusted)
• 2024 price: ~$140/share
• Return: 2,700%+ in 9 years
• $10,000 →$280,000

• TAM expansion = growth re-acceleration
• “Picks and shovels” plays (sell to gold miners) can be best growth bets
• Market leadership + new technology = explosive growth
• Even “mature” companies can become growth stocks again

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Success Checklist

• Understood growth investing principles (pay fair price for exceptional growth)
• Learned key growth metrics (revenue growth, PEG, TAM, Rule of 40)
• Used Maverick to screen for growth stock candidates
• Performed deep analysis on 3-5 growth stocks using Money
• Evaluated growth narratives (is the story real or hype?)
• Checked valuations (avoid overpaying - PEG under 2.0)
• Assessed management quality (founder-led, insider ownership)
• Built or planned your first growth portfolio (10-15 stocks or ETF-based)
• Set expectations for volatility (20-50% swings are normal)
• Committed to long-term holding period (3-10 years minimum)
• Identified your sell disciplines (when to trim/exit)

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What’s Next?

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Related Workflows:

• Value Investing with Sage - Balance growth with value
• Sector Allocation Strategy - Diversify across sectors
• Rebalancing Your Portfolio - Manage winners and trim
• Monthly Portfolio Review - Track growth metrics
• Understanding Stock Fundamentals - Deepen analysis

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Continue Learning:

• Read “One Up On Wall Street” by Peter Lynch (growth investing classic)
• Study FAANG earnings reports (learn how growth companies report)
• Follow growth investors on Twitter/X (Cathie Wood, ARK Invest research)
• Join growth investing communities (r/stocks, r/investing on Reddit)

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Practice:

• Run weekly growth screens using Maverick
• Analyze 1-2 growth stocks per week
• Paper trade growth positions before using real money
• Track earnings releases for your holdings