To The Moon

Revenue growth is only the first step. The real compounding happens when a company can turn higher revenue into even faster FCF growth, and then turn that FCF growth into even faster FCF per share growth. 📈 That is where three powerful forces come together: Margin expansion + Buybacks + Multiple contraction A company doesn't necessarily need explosive revenue growth to generate strong long-term shareholder returns. If margins keep expanding, cash flow can grow faster than revenue. If management keeps buying back shares, FCF per share can grow even faster. And if the valuation multiple doesn't expand — or even contracts — the underlying business can still deliver strong returns. 🔥 The companies that stand out The following 24 companies show the characteristics of this kind of compounding mo

$Apple(AAPL)$ has delivered a staggering 2,860% gain 📈, but its impressive track record does not mean the stock is without risk. 🔊 Pricing Power vs. Mega Client Apple controls an estimated 40–50% of the smartphone audio market, yet more than 85% of revenue comes from a single mega-client. That concentration creates a structural risk that investors cannot ignore, even with strong market share. 💰 Capital Efficiency Its asset-light, fabless model keeps capital requirements low while generating roughly 28% cash return on capital. Steady buybacks add another layer of shareholder support. 📊 Valuation Matters Our conservative two-year forecast looks at whether a 9%+ FCF yield provides enough margin of safety at current levels. 🔎 The key question is no lo

During 13F season, one of the most useful exercises is comparing the holdings of several high-quality growth funds to see where their portfolios overlap. $MasterCard(MA)$ and $Visa(V)$ sit at the top of the list, with all six funds holding both names. But the more interesting opportunities may come from the companies with less consensus, where fewer investors are paying attention. $Moody's(MCO)$ $Fair Isaac(FICO)$ $Alphabet(GOOGL)$ $Microsoft(MSFT)$ $Amazon.com(AMZN)$

There are three drives of share price appreciation: ● Multiple expansion - turning revenue growth into even higher FCF growth ● Buybacks - turning FCF growth into even higher FCF per share growth ● Multiple expansion - turning FCF per share growth into even higher share price growth Here are the $S&P 500(.SPX)$ and S&P 400 companies that are leading the charge. Take a look at $Cintas(CTAS)$ ● Margin expansion turned 9% revenue growth into 26% FCF growth ● Buybacks turned 26% FCF growth into 27% FCFps growth ● Multiple contraction meant that the 27% FCFps growth only produced 22% share price growth, suggesting that this cash generating machine is now undervalued. Other examples on the list are: - <

Terry Smith's Early Investments Fundsmith's change in strategy Terry Smith is the Founder and Chief Investment Officer of the UK-based fund $Fundsmith Equity ETF(ETFT)$ . Earlier this month, a letter published by Terry caused a subsequent flurry of commentary concerning a deviation in his investment style. Terry is a quality-focused investor. His strategy is to run a concentrated and low-turnover portfolio of quality companies trading at a reasonable valuation. In his most recent letter, he announced that he's going to make a slight tweak to this approach: We will take more account of momentum — both fundamental and share price — in our investment decisions. In particular, we will be much less willing to deploy the time-honoured technique of buyin

These companies have something unusual and rare in common. Their FCF has high and predictable growth (2nd and 3rd column), while their FCF yield remains fairly constant (4th column). In other words, their share price appreciation has been through FCF going up, not a re-rating leading to FCF yield contracting. $Republic(RSG)$ $Nordson(NDSN)$ $Allegion PLC(ALLE)$ $Travelers(TRV)$ $Medpace(MEDP)$ $Intercontinental Exchange(ICE)$ $Primerica(PRI)$ $Hartford Insuranc

When I look at $MSCI Inc(MSCI)$ I see three things: 1. A great company with strong financial metrics 2. An attractive valuation 3. A share price that hasn’t done anything for 5 years To me this could means one of two things: 1. The market is right and in the future profitability and business quality will deteriorate 2. The market is wrong and is underestimating future profitability and business quality If it’s the latter, a catalyst will be needed to convince the market that MSCI deserves a higher share price. I agree it’s subjective. But two objective points are (1) its FCF yield is now at a long term high. And (2) other companies of this quality are trading at lower FCF yields.

Passive investors love the $S&P 500(.SPX)$ . What they don’t realise is that the criteria for entering and exiting the index isn’t quite as passive as you would expect. The distinction between the S&P 500 large caps and the S&P 400 mid caps isn't always clear. Here I plot market cap vs revenue. It’s interesting to see that there are S&P 400 companies that have a larger cap and greater revenue than some S&P 500 companies.

The distinction between an $S&P 500(.SPX)$ and an S&P 400 company isn't always clear. Here I plot market cap vs revenue. While revenue isn't part of the committe's consideration, it's interesting to see that there are some mid cap companies making more in sales than some large caps. Will $Curtiss-Wright(CW)$ be the next company to graduate from the S&P 400 to the S&P 500? With a market cap of $27.8bn it is already above the $22.7bn threshold to enter the index. Plus, the S&P 500 has an average PE of 33, while the S&P 400 has an average PE of 27. So a graduation could see a re-rating too.

The outperformance of semiconductor $VanEck Semiconductor ETF(SMH)$ companies isn’t a new thing. However, 2-3 years of outperformance are normally met with a mild correction afterwards. 2026 could be the fourth year in a row of outperformance, suggesting 2027 could see a correction - not that markets listen to historic trends! PS: Here’s my framework for determining whether a company is investable: 1. Financials - I look for consistently high returns on capital, high FCFps growth, margin expansion, and affordable debt. 2. Qualitative - Here I look for high market share, a mission critical product, a business not overly reliant on raw materials and expensive to maintain physical assets. 3. Valuation - I infer how much growth the market is pricing in