Man Group explores whether buying extremely expensive stocks can still generate strong returns, challenging traditional valuation logic. The paper highlights how stocks with EV/Sales above 10x reached dot-com era levels, yet in some cases continued outperforming. It raises the idea that growth persistence, not valuation, may be the dominant driver.
The Wisdom Of Buying Absurdly Expensive Stocks
Man Group
Dan Taylor
Research
8 Pages
Key Takeaways
Extreme Valuation Premiums: Stocks with EV/Sales above 10x reached their highest levels since 2000, yet still delivered competitive forward returns in certain periods.
Growth Persistence Matters: Top revenue growth decile stocks sustained elevated multiples and outperformed peers by roughly 5–7% annually over multi-year horizons.
Valuation Alone Misleads: High-multiple stocks did not consistently underperform, with some cohorts beating the market even after starting valuations exceeded 8x sales.
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