Yeah, market cap is important but more important in relation to TAM. It’s a quick and dirty gauge to guesstimate how much growth might been available in the future.
This is exactly the point of the "S curve, you cannot grow big in a small market so TAM matters. In addition, the “S” curves shows how growth typically happens. The slow initial phase negates the idea of “getting in early” and the slow late phase the idea of hanging on.
The idea of putting a number on the final size leads to static thinking while growth is very much a dynamic happening. The best time to invest for growth is during the company’s prime growth stage. As a rule of thumb that’s between 15 and 85% market penetration by the whole industry, not just by the company you are looking at.
Above I highlight for growth because there are specialists who invest early, venture capitalists, and late, dividend investors, neither of which is addressed by Saul’s methods.
Then there is the 50% drop which recently happened to an NPI/Saul darling
NVDA: https://softwaretimes.com/pics/nvda-08-28-2019.gif
Nvidia’s story has not changed and an investor like Philip Fisher would have held on. The above chart also follows the Gartner Hype Cycle
https://upload.wikimedia.org/wikipedia/commons/thumb/9/94/Ga…
My point is that stocks are dynamic and it makes little sense to put price goals on them. Analysts and their clients love targets because they don’t see the whole dynamic picture. As GauchoChris stresses, “I want to point out that acquisitions…” M&A also affects growth as do new product/business lines as is the case with Apple (computers, consumer electronics, stores) and Nvidia (gaming, crypto currency, AI, supercomputers, self-driving cars). These new product/business lines can increase TAM dramatically adding “S” curve on top of “S” curve.
We have to accept the realities of complex system that cannot be reduced to a number the way classical economics reduces everything to a single point of equilibrium. That’s not how the world works.
Denny Schlesinger