Why Valuation Isn't Everything When Purchasing a Stock
For some investors, valuation is everything they look at before purchasing a stock. While this has been a successful investing philosophy, it misses out on the biggest stock market winners. Why? Because stock valuations aren't artificially low unless there is some sort of pessimism around the company or the market. When a business is changing the world and multiplying, valuations can inflate and lead many to slap an "overvalued" description onto the stock.
Even if valuations are high, the stock can still provide market-crushing growth. A prime example of this is Nvidia (NASDAQ: NVDA). Nvidia makes some of the best graphics processing units (GPUs) used in gaming applications, data centers, and artificial intelligence. This exciting industry has led to massive revenue and profit growth over the past few years, with these metrics rising 147% and 249%, respectively, from Jan. 26, 2020 to Jan. 30, 2022.
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Source Fool.com
