) often suggest a fairly low chance for a company to dramatically uplift its profitability profile on a sustainable basis. Hence, whether, how, or when a business would materially improve its sustainable return on capital is usually a difficult question and should be cut out from our investment process.
By “winning” here, we mean not only market success in terms of serving customers but also financial success for shareholders. We recommend enterprising stock investors only deal with quality companies, which have the highest probability of delivering high returns on capital on a sustainable basis in the long term.
By now, some of you may have wondered: isn’t it an edge for pros to have the resources for predicting the macro economy and the stock market? Well, much as these are indeed meaningful factors to stock investors, we found nobody is able do that with consistent accuracy. However, a focus on quality companies can come to our rescue to solve the predication dilemma.