Companies that have STEEPER S-curve cycle of growth with LONGEVITY will also trade at .HIGHER valuations

Savvy investors know about the corporate life cycle: 

• start-up, 
• rapid growth phase, 
• mature growth phase, 
• stagnation or outright decline.

Companies in their startup phase lose money.

If they're successful, though, they enter a rapid growth period, where sales - and eventually profits - shoot upward.

Then, alas, comes the point when the company has exhausted all of the easy growth opportunities. The low-hanging fruit has been picked. The company enters a mature phase in which sales maybe growing, but at a much slower rate than before.

Finally, in a company's dotage, it's all management can do to grow the company at all. The company's either in stagnation or outright decline.

Best time to invest is during its explosive growth phase or the mature slower growth phase of a successful company. Emphasis: growth phase.

S-curve cycle of growth

Every business goes through the S-curve cycle of growth: 

• infancy (low growth), 
• expansion (rapid growth) and 
• maturity (slow growth).

Different businesses have a different S-curve shape and longevity.

Some S-curves will be steeper (stronger rates of growth) than others due to major innovation (e.g. Nvidia) that drives rapid adoption and demand across multiple market segments (market size).

Some S-curves will have greater longevity, that is, sustained high growth (expansion phase) for a longer period of time (e.g Amazon, Apple, Facebook) for a longer period of time because of, intellectual property protection or strong network effects. These have enduring competitive advantage.

Companies that have steeper S-curve with longevity will also trade at higher valuations.