7 Comments
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Money Machine Newsletter's avatar

A high ROIC only helps if the company has somewhere useful to put the next dollar. That second part gets missed a lot.

John Phillips's avatar

An article about this crucial topic must be written

Compounding Quality's avatar

Much appreciated, John!

Aman Srivastava's avatar

Great framework for long-term investors! Focusing on high ROCE and consistent cash flows is always the key to finding quality compounders.

Compounding Quality's avatar

Much appreciated, Aman!

EUIJEONG HWANG's avatar

The Diploma chart is the real proof, not the formula — 18.9% for 34 years is what a high ROIC floor buys once reinvestment gets layered on top of it.

Compounding Quality's avatar

Diploma is an amazing business. It could be tremendously valuable to study their business model more