We all know and love the high-growth companies that have (hopefully) helped to contribute to our market returns, but how can you run the tape measure over them? What kind of numbers can help you to value companies that are growing fast but are not yet maximizing profit margins? According to Claude Walker, the magic number is 40.

Claude Walker is the founder of A Rich Life where he writes the Ethical Equities column. He loves his ASX tech stocks and investing in smaller unloved and ignored microcaps where the market is much less efficient.

In this episode we chatted about The Rule of 40. He was inspired by the announcement from new CEO of Xero (ASX:XRO) Sukhinder Singh Cassidy. She has struck a completely different tone than the old CEO. She says that the company will now be “more balanced and look to Rule of 40 as a useful performance evaluation measure in managing the balance of growth and profitability.”

Blog post available at: https://www.sharesforbeginners.com/blog/arichlife2023

Phil's Linktree: https://linktr.ee/phil_muscatello

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