r/valueinvesting
The Best European Quality Compounders
Author seeks top European quality compounders with high ROIC and strong moats, sharing a watchlist including ASML and Novo Nordisk.
- Focus on high ROIC and strong moats ensures efficient wealth generation and long-term compounding.
- European markets offer undervalued quality compounders with exceptional management and capital allocation.
- Strict screening criteria filter out capital burners and underperformers to find true gems.
- Overly strict historical performance criteria might exclude fundamentally strong companies.
Guys, you already know about my obsession with quality compounders. A couple of days ago, we had a great discussion about the best compounders, but we focused primarily on US stocks. Now, I want to bring the focus in EU: what are, in your opinion, the absolute best European compounders?
I’m looking for companies that meet three strict criteria:
- High, consistent ROIC: No capital-burners; I want machines that generate wealth efficiently.
- Exceptional Management: Leaders who know how to allocate capital for the longterm .
- A Defensible Moat: It doesn't have to be the "ASML level" of untouchability for everyone, but there must be a clear, tangible competitive advantage.
One ground rule: I’m looking for companies with an impressive track record. Let’s skip stocks that have underperformed or barely managed a +100% gain over the last 20 years because that’s not what I’d call a "compounder."
My portfolio is limited to about 20 positions, so my selection process is ruthless: before a stock even gets on my watchlist, it needs to truly stand out.
To kick things off, here are the ones already on my watchlist:
ASML, Safran, , Hermès, LVMH, Ferrari (RACE), Lotus Bakeries, Games Workshop, Deutsche Börse, RELX, Wolters Kluwer, Investor AB, Novo Nordisk, Evolution AB, Lifco AB, Dino Polska, Assa Abloy, GTT
i didnt put SAP in this list just because it’s up 400% since IPO 25 years ago so that’s not a compounder for me
Now it’s your turn. Which other European gems deserve to be on this list? I’m really curious to see if you have any "pearls" I might have missed!