This approach to growth stock valuation, which closely parallels current developments in capital budgeting theory, appears to have been first developed by John Burr Williams in The Theory of Investment Value (Cambridge, Mass.: Harvard University Press, 1938). A 1954 article by ClendeninJohn C.Van CleaveMaurice, “Growth and Common Stock Values,”Journal of Finance, Dec. 1954, pp. 365–376, initiated the recent surge of interest in the topic. Also see BurrellO. K., “A Mathematical Approach to Growth Stock Valuation” and KotlerPhilip, “Elements in a Theory of Growth Stock Valuation,” reprinted in LernerEugene M., Readings in Financial Analysis and Investment Management (Homewood, Ill.: Richard D. Irwin, Inc., 1963).
2.
Holt comments that the “growth opportunities of a ‘growth’ company are likely at some point in time to slow down to the rate that is normally achieved by companies generally.” HoltCharles C., “Influence of Growth Duration on Share Prices,”Journal of Finance, Sept. 1962, p. 467.
