Leandro's avatar
$123.3m follower assets
High quality and high growth. Which one is more durable?
I find these two images quite interesting, especially when looked at at the same time.

This image shows that the probability of maintaining business quality over time is high. 70% of companies that had a greater than 25% ROIC in 2007 were able to maintain it throughout the next decade.

The image below shows that the probability of maintaining high growth is low. Only 15% of companies that were growing at 15% rates were able to maintain that growth into the next decade:

Moats are important but so are markets that allow for incremental growth to take advantage of this moat.
Leon's avatar
There is no long term growth without high quality
StockOpine's avatar
@mavix was about to comment a similar statement. That says it all.
Young Money Capital's avatar
That’s amazing that so many high ROIC companies maintained it.
Leandro's avatar
@youngmoneycapital the studies in the book show that they even managed to improve them so the gap got wider
Uday's avatar
Would be interesting to see the split by sector, with the sectoral weights making up the markets changing so much in this decade