The document outlines the sales growth required over various time periods to achieve annual returns of 12%, 15%, 20%, and 25% under different price-to-sales ratio scenarios. It shows that higher targeted returns and lower starting price-to-sales ratios require increasingly high compound annual growth rates of sales to be maintained over the holding period. For example, to achieve a 25% annual return over 10 years starting from a price-to-sales ratio of 1.7 would require a 33.3% compound annual sales growth rate.
2. Maintaining Current Price-to-Sales
Annualized Return of 15%
Total Years Holding Stock
Sales Required to Return
15% per Year
CAGR of sales for 15%
Return
1 $216.08 15.12%
3 $272.45 13.22%
5 $328.82 11.87%
7 $385.18 10.82%
10 $469.74 9.61%
Total Years Holding Stock
Sales Required to Return 15% per
Year
1 $216.08
3 $285.76
5 $377.92
7 $499.80
10 $760.14
3. Maintaining Current Price-to-Sales
Desired Annualized Return of 20%
Total Years Holding Stock
Sales Required to Return
20% per Year
CAGR of sales for 20%
Return
1 $225.47 20.12%
3 $300.63 17.00%
5 $375.79 14.89%
7 $450.95 13.34%
10 $563.68 11.62%
Total Years Holding Stock
Sales Required to Return 20% per
Year
1 $225.47
3 $324.68
5 $467.54
7 $673.26
10 $1,163.39
4. Maintaining Current Price-to-Sales
Desired Annualized Return of 25%
Total Years Holding Stock
Sales Required to Return
25% per Year
CAGR of sales for 25%
Return
1 $234.87 25.13%
3 $328.82 20.55%
5 $422.76 17.63%
7 $516.71 15.56%
10 $657.63 13.36%
Total Years Holding Stock
Sales Required to Return 25% per
Year
1 $234.87
3 $366.98
5 $573.41
7 $895.95
10 $1,749.91
5. Reaching Price to Sales Ratio of: 5.6 (Peer Avg.)
Desired Annualized Return of 12%
Total Years Holding
Stock
Sales Required to Return
12% per Year
CAGR of Sales for 12%
Return
1 $120.52 -35.79%
3 $151.18 -6.96%
5 $189.64 0.21%
7 $237.88 3.44%
10 $334.21 5.94%
6. Reaching Price to Sales Ratio of: 5.6 (Peer Avg.)
Desired Annualized Return of 15%
Total Years Holding
Stock
Sales Required to Return
15% per Year
CAGR of Sales for 15%
Return
1 $123.75 -34.07%
3 $163.66 -4.47%
5 $216.43 2.89%
7 $286.24 6.21%
10 $435.33 8.78%
7. Desired Annualized Return of 20%
Reaching Price to Sales Ratio of: 5.6 (Peer Avg.)
Total Years Holding
Stock
Sales Required to Return
20% per Year
CAGR of Sales for 20%
Return
1 $129.13 -31.21%
3 $185.94 -0.31%
5 $267.76 7.36%
7 $385.57 10.83%
10 $666.27 13.51%
8. Desired Annualized Return of 25%
Reaching Price to Sales Ratio of: 5.6 (Peer Avg.)
Total Years Holding
Stock
Sales Required to Return
25% per Year
CAGR of Sales for 25%
Return
1 $134.51 -28.34%
3 $210.17 3.84%
5 $328.39 11.84%
7 $513.11 15.45%
10 $1,002.16 18.24%
9. Reaching Price to Sales Ratio of: 1.7 (S&P Avg.)
Desired Annualized Return of 12%
Total Years Holding
Stock
Sales Required to Return
12% per Year
CAGR of Sales for 12%
Return
1 $399.84 113.02%
3 $501.56 38.77%
5 $629.16 27.37%
7 $789.21 22.77%
10 $1,108.79 19.44%
10. Reaching Price to Sales Ratio of: 1.7 (S&P Avg.)
Desired Annualized Return of 15%
Total Years Holding
Stock
Sales Required to Return
15% per Year
CAGR of Sales for 15%
Return
1 $410.55 118.73%
3 $542.95 42.48%
5 $718.05 30.78%
7 $949.63 26.06%
10 $1,444.26 22.64%
11. Desired Annualized Return of 20%
Reaching Price to Sales Ratio of: 1.7 (S&P Avg.)
Total Years Holding
Stock
Sales Required to Return
20% per Year
CAGR of Sales for 20%
Return
1 $428.40 128.24%
3 $616.90 48.68%
5 $888.33 36.47%
7 $1,279.20 31.54%
10 $2,210.45 27.97%
12. Desired Annualized Return of 25%
Reaching Price to Sales Ratio of: 1.7 (S&P Avg.)
Total Years Holding
Stock
Sales Required to Return
25% per Year
CAGR of Sales for 25
% Return
1 $446.25 137.75%
3 $697.27 54.87%
5 $1,089.48 42.15%
7 $1,702.31 37.02%
10 $3,324.82 33.30%