Every company is unique.

You cannot judge a hyper-growth stock like a regulated utility.
We need to chose the right metric for the right business.

A company has two levers to increase its stock’s value.

Increase cash generation
The fundamental engine of a business.
Great companies have levers to growth revenues or expand margins.

Expand multiples
Less science, more sentiment.
But sentiment also follows some rules and has some specific triggers.

Accelerated Growth: the ceiling disappears and market prices optimism.
This is growth investing 101.

Margin Expansion: Often means operating leverage.
Generating more cash with the same revenues deserves an efficiency premium.

Increased Trust: Predictability is valuable.
A company that can generate cash safely for decades earns a trust premium.

This is how the market works
Understanding this helps avoid value traps.
Some companies look cheap but have no path to margin expansion, revenue acceleration,
safe cash generation, etc... Without a catalyst, those will remain average.

I avoid those.
We look for names the market is about to fall in love with;
companies that can accelerate growth or increase cash generation,
creating a double appreciation: rising cash and expanding multiples.

That’s what stock picking is about.