Against the odds

Achieving annual sales growth of more than 10% is challenging, but sustaining that level of growth consistently over a decade is nearly impossible. The graph below illustrates this point with companies in the S&P 500—where only one managed to maintain such high growth over 10 years. For investors, the odds of randomly selecting that company before conducting any research are just 1 in 500. This helps explain why growth investing is so difficult. At ECP, we focus on a company's existing earning power—we appreciate growth but refuse to overpay for potential, as identifying extraordinary growth in advance is exceptionally difficult.