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par | Oct 24, 2025 | Dossiers | 0 commentaires

business-model in 10-15% EPS range for 2025-2026

steady 10-15% EPS range for years

Rank Company (Ticker) Market Cap (USD) EPS Growth (3-5 yr CAGR) Company Target / Outlook Financial Strength Key Alerts / Risks
1 Mastercard (MA) ~$380 B ≈ 14–15% Management targets mid-teens EPS CAGR (2025-27) Low debt, strong cash flow Regulation, global payment volumes
2 Visa (V) ~$450 B ≈ 13–14% Long-term low- to mid-teens EPS growth Excellent margins, net-cash balance Recession impact on spending
3 S&P Global (SPGI) ~$120 B ≈ 12–14% Guides for low- to mid-teens EPS CAGR Healthy leverage (~2× EBITDA) Ratings issuance cycles, regulation
4 Moody’s (MCO) ~$65 B ≈ 12–13% Framework: low- to mid-teens EPS growth Strong FCF, modest leverage Credit-market cyclicality
5 Global Payments (GPN) ~$28 B ≈ 11–13% Target: double-digit EPS, rising to low-teens Debt from acquisitions manageable M&A integration, competition
6 Equifax (EFX) ~$30 B ≈ 11–13% Aims for 12–15% EPS growth Solid cash flow, moderate debt Credit cycles, data security
7 Stryker (SYK) ~$100 B ≈ 10–13% Guides for ~11% EPS growth in 2025 Strong balance sheet, high ROIC Supply-chain or regulatory issues
8 Union Pacific (UNP) ~$135 B ≈ 9–12% Plans for high-single to low-double-digit EPS CAGR Capex-heavy but steady cash flow Freight demand, fuel costs

*Market caps and growth figures are approximate (Q4 2025). Sources: company investor-day presentations, SEC filings, Reuters, MarketBeat, and Simply Wall St.
This information is for educational purposes only and does not constitute financial advice.

steady then exploding : Amphenol Corp. (APH)

Company Overview

  • Amphenol is a major global player in electronic interconnect, sensor and antenna solutions: connectors, fiber-optics, high-speed cables, sensors and antennas. amphenol.com+3amphenol.com+3stockrow.com+3

  • Founded in 1932, headquartered in Wallingford, Connecticut USA. amphenol.com+1

  • It serves a wide range of end markets: automotive, broadband communications, commercial aerospace, defence/military, industrial, IT/datacom, mobile devices and mobile networks. amphenol.com+2GlobalData+2

  • The company emphasizes cost control and global scale in its manufacturing and product-diversification strategy. amphenol.com+1

Business Segments & Strengths

  • The breadth of its markets gives Amphenol exposure to multiple growth drivers: EV/automotive, data centres/IT, defence, broadband, industrial applications. amphenol.com+1

  • Technological edge: high-speed interconnects, fiber optic, sensors etc. These are increasingly important in things like 5G/6G, data-centres, AI infrastructure. AInvest+1

  • Its global manufacturing footprint and diversified end markets arguably help reduce exposure to any single segment or geography.

Recent Performance & Key Metrics

  • In Q2 2025, Amphenol posted revenue of about US$5.65 billion, beating a consensus of about US$5.01 billion. MarketBeat+1

  • EPS in that quarter was $0.81 vs consensus around $0.66 (a beat). Investing.com

  • Growth forecasts: Analysts expect roughly ~12.5% earnings growth & ~11% revenue growth per annum over next few years. Simply Wall St

  • Return on equity (ROE) forecast ~26% in 3 years. Simply Wall St

Current Expectations & Analyst Sentiment

Price Targets & Ratings

  • On one hand, some sources show average 12-month price targets around ~$122-$126. www.alphaspread.com+2StockAnalysis+2

  • On the other hand, some higher targets exist (up to ~$150) from bullish analysts given growth potential. TipRanks+1

  • Analyst consensus is generally “Buy” (or similar) though some caution remains given valuation and some segment risks. Investing.com+1

Growth Drivers & Risks

  • Drivers: Data-centre/AI infrastructure boom, fiber optics/build-out of networks, automotive electrification, defence procurement. For example, Amphenol expects strong demand in high-speed interconnects tied to AI workloads. AInvest+1

  • Risks: Some analysts flag that despite strong fundamentals, the stock may face headwinds from technical signals, high valuation, and parts of the business slower to grow. AInvest+1

Strategic Initiatives & Recent Moves

  • The company is actively acquiring businesses to bolster its capabilities in growth areas (e.g., fibre-optics, data centre interconnects, defence) — boosting its strategic position for future growth. Reuters+1

  • Its focus on sectors like AI/data centres is becoming increasingly prominent in its public commentary and analyst coverage. Barron’s

My Summary / What to Watch

  • Amphenol is well-positioned in several secular growth markets (connectivity, data centres, automotive, defence) which is a strong ecosystem for future growth.

  • The recent beat in results is encouraging and shows the business is executing.

  • Valuation appears to already reflect much of the positive outlook — some analysts see only modest upside from current levels, unless growth accelerates or margin improvements happen.

  • Key things to watch:

    1. How much growth comes from new high-speed data/interconnect segments (e.g., AI racks, fibre) versus more mature ones.

    2. Margin trends — as the business scales, will costs/competition keep pressure on margins?

    3. Acquisition integration effectiveness — growth from bought businesses needs to be realised.

    4. Macroeconomic / sector risks — data centre capex shifts, automotive slowdown, defence budget changes could all affect.

  • If you’re considering this stock, it might be more of a “solid growth / structural play” rather than a cheap value buy. Expect decent growth but maybe not explosive upside unless there’s a major catalyst.

 

1. Recent Financial Performance

Revenue & Growth

Profitability & Margins

  • Q4 2024: GAAP diluted EPS of US$0.59 (↑44% vs prior year); adjusted EPS US$0.55 (↑34%). Operating margin ~22.1%; adjusted ~22.4%. Free cash flow ~$648 m for Q4. investors.amphenol.com

  • Entire 2024: GAAP EPS US$1.92 (↑24%); adjusted EPS US$1.89 (↑25%). Operating margin ~20.7%; adjusted margin ~21.7%. Free cash flow ~$2.2 billion. investors.amphenol.com+1

  • Q1 2025: Adjusted diluted EPS US$0.63 (↑58% vs prior year); GAAP EPS US$0.58 (↑32%). Operating margin ~21.3%; adjusted ~23.5%. Free cash flow ~$580 m. investors.amphenol.com

Financial Health / Cash Flow

  • The company has a strong free cash flow generation (e.g., ~$2.2 billion in free cash flow in 2024) which gives it ability to invest, acquire and return capital to shareholders. investors.amphenol.com+1

  • Balance sheet details (assets, liabilities) are available via the SEC filings. SEC+1

Valuation & Forecasts

  • Analysts expect earnings and revenue growth: e.g., projected earnings growth ~12.5% per annum; revenue growth ~11.1% per annum over next several years. Simply Wall St

  • Estimated EPS for 2025 and beyond (from one source): EPS ~US$3.03 for 2025; ~US$3.47 for 2026. wallstreetzen.com

  • One-year price target averages (varies by source): ~US$122 to ~US$126. www.alphaspread.com+2fintel.io+2

2. Expectations & What to Watch

Growth Drivers

  • Strong performance in IT/datacom, mobile devices, defence/communications networks. Q1 2025 growth was largely driven by IT datacom and mobile device markets. investors.amphenol.com+1

  • Analysts believe Amphenol is well-positioned in secular trends: data centres/AI infrastructure, fibre-optics, automotive electrification, defence systems. (Though this is more qualitative)

Forecast Highlights

  • For the quarter ending June 30, 2025, analysts expected EPS ~US$0.66 and revenue ~US$4.97 billion (growth ~37.6% vs prior year) according to Zacks. Nasdaq

  • According to MarketBeat: EPS expected to grow ~11.86% next year (from ~US$2.36 to ~US$2.64) and P/E ratio ~50.18. MarketBeat

  • Return on equity (ROE) forecast ~26% in 3 years. Simply Wall St

Valuation & Upside

  • On average, price targets suggest modest upside from current levels (depending on source) — e.g., a ~$122 target vs current ~US$125 implies limited immediate upside in some estimates. www.alphaspread.com+1

  • However, if growth accelerates (especially in data/infrastructure markets), upside could be larger.

3. Risks & Potential Challenges

  • Valuation risk: The company’s valuation (high P/E) implies strong future growth is expected. If growth slows or disappoints, the stock could suffer. (e.g., P/E ~50 in one estimate) MarketBeat

  • Cyclicality / end-market exposure: Although diversified, Amphenol’s markets (automotive, communications, data centres) can be sensitive to macroeconomic cycles, technological changes, regulatory shifts.

  • Competition & technological shifts: In connectors, fibre-optics and interconnect systems, technology changes (e.g., new materials, architectures) could reduce market share or margins.

  • Integration & acquisition risk: The company is aggressive in M&A to boost growth; success of integration and extracting synergies is non-trivial.

  • Dependence on large customers / end-markets: If major customers (large tech firms, data centre operators) reduce spend or change specifications, it could hurt.

  • Supply chain / material risk: Components, raw materials, global manufacturing — disruptions or cost inflation could impact margins.

  • Geopolitical / regulatory: Given global manufacturing and operations, trade tensions, tariffs, export controls (especially for defence/communications segments) are potential risks.

4. Summary & My View

  • Amphenol is financially strong: good revenue growth in recent quarters, improving margins, strong cash flow, and positioned in growth markets.

  • Forecasts suggest moderate growth (≈10-15%) in earnings/revenue in the coming years under “normal” scenarios.

  • The valuation implies that much of the expected growth is already priced in — which means the risk/reward may be skewed: a lot of upside depends on growth accelerating or beating expectations, whereas disappointments could cause significant downside.

  • If you believe the secular trends (data centres, fibre-optics, EV/automotive interconnects) will play out strongly, this could be a good structural growth play. But if you are looking for margin of safety or “value” investing (cheap entry), this may be less attractive because of the higher valuation and dependence on strong execution.

15-25% EPS, marketcap > 5B

# Company (Ticker) – Domicile Approx. Market Cap EPS Growth Signal (15–25%) Why it qualifies (one-liner)
1 Halma plc (HLMA) – UK Large (>$10B) ~15% CAGR (aims to double EPS every 5 yrs) Explicit long-term ambition to double EPS every five years; FY24/25 delivery consistent.
2 Hexagon AB (HEXA-B) – Sweden Large (>$20B) ≥15% p.a. target Stated objective to increase EPS by at least 15% annually.
3 Addtech AB (ADDT-B) – Sweden Mid/Large (>$5B) ≥15% p.a. (double profits in 5 yrs) Group target: profit growth >15% p.a.; “double profits every five years.”
4 Diploma plc (DPLM) – UK Large (>$10B) ~15%+ (15-yr EPS CAGR ~16%; FY24 EPS +15%) Long track record of mid-teens EPS compounding; latest year ~15% EPS growth.
5 Flowserve (FLS) – USA Mid/Large (>$5B) 20–25% YoY (adjusted EPS outlook) Analyst Day + 2025 updates point to >20% adjusted EPS growth.
6 TSMC (TSM) – Taiwan Mega (>$500B) High-teens EPS implied (rev CAGR ≈20%) Long-term USD revenue CAGR ~20% with high margins → EPS typically high-teens.
7 ServiceNow (NOW) – USA Mega (>$100B) ~20% non-GAAP EPS implied (subscr. rev ≈20%) Guides ~20% subscription revenue growth with operating leverage.
8 Palo Alto Networks (PANW) – USA Mega (>$100B) ~20–25% EPS trajectory (FY26 guide) FY26 EPS guide implies strong bottom-line growth within range.
9 MercadoLibre (MELI) – LatAm Large (>$50B) ~24%+ near-term EPS growth Analysts/model updates show EPS growth ≈ mid-20s ahead.
10 Beijer Ref (BEIJ-B) – Sweden Large (>$10B) ~20% EPS (recent) Q1–Q2 2025: strong EPS growth (~20%) and new 10–15% sales CAGR target supports ongoing EPS 15–25% potential.

Notes: Market caps are approximate (Q4 2025). “EPS growth signal” reflects company targets or near-term guidance/track record likely to produce ~15–25% EPS growth. This is educational information, not investment advice.

EBITDA margin > 20% / marketcap > 5B

Company (Ticker) – Country Scale EBITDA Margin* Period Source
NVIDIA (NVDA) – US Mega-cap ~56.6% FY2024 Macrotrends
Taiwan Semi (TSMC) – Taiwan Mega-cap ~69–71% TTM/2025Q2 Macrotrends
Microsoft (MSFT) – US Mega-cap ~57.7% FY2025 AlphaQuery
Apple (AAPL) – US Mega-cap ~34.7% TTM/FY2024 Macrotrends
Meta Platforms (META) – US Mega-cap ~53% TTM/2025Q2 Macrotrends
Broadcom (AVGO) – US Mega-cap ~50–56% TTM/FY2024–25 Macrotrends
Visa (V) – US Mega-cap ~60–70% TTM/2024–25 Macrotrends
ASML (ASML) – Netherlands Mega-cap ~35.2% FY2024 AlphaQuery
Novo Nordisk (NVO) – Denmark Mega-cap ~51% TTM/2024–25 Macrotrends
McDonald’s (MCD) – US Mega-cap ~53–54% TTM/2024–25 Macrotrends
Ferrari (RACE) – Italy Large-cap ~38.3% FY2024 Company/Reuters
Hermès (RMS.PA) – France Mega-cap ~46–49% TTM/2025 GuruFocus/Morningstar
LVMH (MC.PA / LVMUY) – France Mega-cap ~26–29% FY2024 Finbox/Macrotrends
Adobe (ADBE) – US Mega-cap ~35.3% FY2024 AlphaQuery

*EBITDA margin shown is the latest available (TTM or the most recently completed fiscal year). All companies listed have market capitalizations above $5B as of Q3–Q4 2025. This is informational, not investment advice.

Companies with EBITDA Margin >20% and Market Cap >$5B

Technology & Software Companies

Company Sector EBITDA Margin Range Key Metrics
Nvidia Semiconductors 50%+ Net income margin ~51.69%
Microsoft Software 30-40% Revenue $281.72B, ROE 32.44%
Visa Payment Processing 50%+ Revenue $35.93B, ROE 52.65%
Meta Platforms Social Media/Tech 33% Part of FAANMG group
Apple Consumer Tech 30-40% Top tech giant
Alphabet (Google) Tech/Advertising 30-40% Digital advertising leader
Oracle Enterprise Software 25-30% Leading EBIT margins in software
Salesforce CRM/SaaS 25-30% EBITDA $13B (TTM)
Adobe Software 30%+ Creative & enterprise software
ServiceNow Cloud Platform 25-30% Cloud-based platform leader

Pharmaceutical Companies

Company EBITDA Margin Range Key Highlights
Eli Lilly 30-35% 32% revenue growth in 2024
Novo Nordisk 30-35% 26% annual growth, diabetes/obesity drugs
Johnson & Johnson 30-40% Top-rated pharma company
Roche 30-40% Industry strength leader
AstraZeneca 25-35% Major global pharma
Pfizer 25-35% Large pharmaceutical company
GSK 25-35% Global pharmaceutical giant
Sanofi 25-35% French pharma leader
Novartis 25-35% Swiss pharmaceutical company

Real Estate Investment Trusts (REITs)

Company Type Market Cap EBITDA Margin
Prologis Industrial $97.90B 60-70%
Equinix Datacenter $90.98B 60-70%
American Tower Communications $85.71B 60-70%
Welltower Healthcare $78.48B 60-70%
Simon Property Group Retail ~$50B 60-70%

Industry Benchmarks

Industry Typical EBITDA Margin
REITs (Retail/Industrial) 60-70%
Software/SaaS 30-40%+
Pharmaceuticals 25-40%
S&P 500 Average 20.3%
Russell 2000 Average 12.4%
Traditional Manufacturing ~10%

Companies with EBITDA Margin >20% / Net Income Margin >20% /Market Cap >$5B

 

Payment Processing Giants

Company EBITDA Margin Net Income Margin Market Cap Key Notes
Visa ~55%+ 52.16% ~$500B+ Profit margin of 55% on Q4 revenue
Mastercard ~50%+ 44.93% ~$400B+ Net profit margins exceed 50%

Technology Companies

Company EBITDA Margin Net Income Margin Market Cap Key Notes
Microsoft ~45-50% 35.4% ~$3T Net income $92.8B on revenue $261.8B
Apple ~35-40% 24.3-24.92% ~$3.5T Operating margin of 31.57%
Meta Platforms 33-40% ~25-30% ~$1.3T Part of FAANMG with strong margins
Alphabet (Google) 30-35% ~22-25% ~$2T Major digital advertising player
Nvidia 55-60% 51.69% ~$3.5T Exceptional AI-driven profitability

Pharmaceutical Companies

Company EBITDA Margin Net Income Margin Market Cap Key Notes
Eli Lilly 30-35% ~25-30% ~$800B+ Operating margin of 25.34%
Novo Nordisk 35-40% ~30-35% ~$500B+ Gross margin of nearly 83%
Roche 30-35% ~20-25% ~$250B Top pharmaceutical company
Johnson & Johnson 30-40% ~20-22% ~$400B Strong pharmaceutical margins

Enterprise Software Companies

Company EBITDA Margin Net Income Margin Market Cap Key Notes
Oracle 35-40% ~20-25% ~$400B+ Led software companies in EBIT margin
Adobe 35-40% ~25-28% ~$250B+ High-margin software business
Salesforce ~25-30% ~20-22% ~$300B+ EBITDA of $13 billion

Other High-Margin Companies

Company EBITDA Margin Net Income Margin Market Cap Key Notes
ASML 30-35% ~25-28% ~$350B Semiconductor equipment monopoly
Intuit 30-35% ~20-25% ~$200B Financial software leader

Key Industry Insights

  • Pharmaceutical companies with patented drugs can enjoy EBITDA margins exceeding 40% or even 50%, driven by high pricing power from patent protection.
  • Software companies enjoy EBITDA margins over 40% due to scalability and absence of significant variable costs beyond initial development.
  • A net profit margin of 20% an

ebitda margin > 20% and marketcap > 5B

 

Company (Ticker) – Country Scale EBITDA Margin* Period Source
NVIDIA (NVDA) – US Mega-cap ~56.6% FY2024 Macrotrends
Taiwan Semi (TSMC) – Taiwan Mega-cap ~69–71% TTM/2025Q2 Macrotrends
Microsoft (MSFT) – US Mega-cap ~57.7% FY2025 AlphaQuery
Apple (AAPL) – US Mega-cap ~34.7% TTM/FY2024 Macrotrends
Meta Platforms (META) – US Mega-cap ~53% TTM/2025Q2 Macrotrends
Broadcom (AVGO) – US Mega-cap ~50–56% TTM/FY2024–25 Macrotrends
Visa (V) – US Mega-cap ~60–70% TTM/2024–25 Macrotrends
ASML (ASML) – Netherlands Mega-cap ~35.2% FY2024 AlphaQuery
Novo Nordisk (NVO) – Denmark Mega-cap ~51% TTM/2024–25 Macrotrends
McDonald’s (MCD) – US Mega-cap ~53–54% TTM/2024–25 Macrotrends
Ferrari (RACE) – Italy Large-cap ~38.3% FY2024 Company/Reuters
Hermès (RMS.PA) – France Mega-cap ~46–49% TTM/2025 GuruFocus/Morningstar
LVMH (MC.PA / LVMUY) – France Mega-cap ~26–29% FY2024 Finbox/Macrotrends
Adobe (ADBE) – US Mega-cap ~35.3% FY2024 AlphaQuery

*EBITDA margin shown is the latest available (TTM or the most recently completed fiscal year). All companies listed have market capitalizations above $5B as of Q3–Q4 2025. This is informational, not investment advice.

CHATGPT : global companies  with market cap ≥ $5B / EBITDA margin > 20% / positive free cash flow (FCF) 

Company (Ticker) – Country Approx. Scale EBITDA Margin* FCF (latest) Evidence
NVIDIA (NVDA) – US Mega-cap ~63.9% FCF $60.9B (FY25) EBIT margin · FCF
Microsoft (MSFT) – US Mega-cap 57.7% FCF (positive, TTM) EBITDA margin · FCF
Meta Platforms (META) – US Mega-cap 51.6% FCF $54.1B (TTM) EBITDA margin · FCF
Adobe (ADBE) – US Mega-cap 35.3% FCF $9.6B (FY25) EBITDA margin · FCF
ASML (ASML) – NL Mega-cap 35.2% FCF positive (recent) EBITDA margin · cash-flow metrics
Visa (V) – US Mega-cap 68.6% FCF $15.7B (recent qtr annualized) EBITDA margin · FCF
Broadcom (AVGO) – US Mega-cap (EBIT 36.9%; EBITDA >20%) FCF $19.4B (FY24) margin · FCF
CME Group (CME) – US Large-cap 69.6% FCF $3.6B (TTM) EBITDA margin & FCF
Intercontinental Exchange (ICE) – US Large-cap 63.0% FCF $3.86B (TTM) EBITDA margin · FCF
Novo Nordisk (NVO) – DK Mega-cap 50.8% FCF $10.7B (FY24) EBITDA margin · FCF
McDonald’s (MCD) – US Mega-cap 53.3% FCF $6.8B (FY24) EBITDA margin · FCF
TSMC (TSM) – Taiwan Mega-cap 68.6% FCF $26.6B (FY24) EBIT/EBITDA margins · FCF

*Margins and cash-flow figures are latest available (TTM or most recent fiscal year) as of Oct 24, 2025. This table is for information only and not investment advice.

claude Opus  : global companies  with market cap ≥ $5B / EBITDA margin > 20% / positive free cash flow (FCF) 

Technology Giants

Company EBITDA Margin Free Cash Flow (Annual) Market Cap Key Notes
Apple 35-40% $108.8B (2024) ~$3.7T FCF margin of 27.7%
Microsoft 45-50% ~$60-70B ~$3T Strong cloud and software margins
Alphabet (Google) 30-35% ~$60-70B ~$2T High FCF yield among trillion-dollar companies
Amazon 20-25% $38.2B (2024) ~$2.5T FCF margin improving to 5.85%
Nvidia 55-60% ~$30-40B ~$3.5T FCF surging, catching Microsoft/Google
Meta Platforms 33-40% ~$40-50B ~$1.3T Strong FCF from advertising business

Payment Processing

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Visa ~55% ~$18-20B ~$500B+ Exceptional FCF margins
Mastercard ~50% ~$10-12B ~$400B+ High cash generation

Enterprise Software

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Oracle 35-40% ~$8-10B ~$400B+ Strong database and cloud business
Salesforce 25-30% ~$8-10B ~$300B+ Aiming for FCF and EBITDA positive
Adobe 35-40% ~$7-8B ~$250B+ High-margin creative software
ServiceNow 25-30% ~$3-4B ~$180B+ Cloud platform with strong margins
Intuit 30-35% ~$3-4B ~$200B+ Financial software leader

Pharmaceutical Companies

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Eli Lilly 30-35% ~$10-15B ~$800B+ Strong cash from GLP-1 drugs
Novo Nordisk 35-40% ~$15-20B ~$500B+ Diabetes/obesity drug profits
Johnson & Johnson 30-40% ~$18-20B ~$400B Diversified healthcare
Roche 30-35% ~$15-18B ~$250B Strong oncology portfolio
AbbVie 35-40% ~$15-18B ~$350B Immunology leader
Pfizer 25-30% ~$8-12B ~$150B Post-COVID normalization
Merck 30-35% ~$12-15B ~$300B Top company in cash flow screen

Other High-Quality Companies

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Broadcom 40-45% ~$15-18B ~$700B+ High FCF yield and margins
Texas Instruments 40-45% ~$6-8B ~$180B Analog semiconductor leader
Coca-Cola 30-35% ~$9-11B ~$280B Beverage giant
PepsiCo 20-25% ~$7-9B ~$240B Food & beverage conglomerate
Procter & Gamble 20-25% ~$15-17B ~$400B Consumer goods powerhouse
Home Depot 20-25% ~$15-18B ~$400B Retail leader
Costco 20-25% ~$7-8B ~$400B Warehouse retail

Telecommunications & Media

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Comcast 35-40% ~$12-15B ~$180B Cable and media
Verizon 35-40% ~$10-14B ~$170B Telecom infrastructure
AT&T 35-40% ~$8-12B ~$140B Wireless and fiber
Netflix 20-25% ~$5-7B ~$240B Turned FCF positive after years of burning cash

Industrial & Infrastructure

Company EBITDA Margin Free Cash Flow Market Cap Key Notes
Union Pacific 40-45% ~$5-6B ~$140B Rail transportation
CSX 40-45% ~$3-4B ~$70B Strong FCF from rail operations
Waste Management 25-30% ~$2-3B ~$80B Environmental services
3M 20-25% ~$5-6B ~$60B Diversified industrial

Key Insights

  • SaaS Benchmark: For SaaS businesses, a healthy FCF means having enough to cover at least a month’s operating costs, with good FCF being 20-25% of revenue.
  • General Target: Most companies aim for an FCF margin of 10% to 15% because it shows they’re generating cash flow from their core operations.
  • Growth Capability: Companies with strong FCF can reinvest aggressively over time without taking on debt or issuing new shares.
  • Tech Services Conversion: Technology services companies typically show FCF conversion of 60-70% of EBITDA.

Selection Criteria Summary

All companies listed meet the following criteria:

  • ✅ EBITDA margins exceeding 20%
  • ✅ Positive free cash flow generation
  • ✅ Market capitalizations well above $5 billion
  • ✅ Sustainable business models with strong competitive positions

These represent the most financially robust businesses globally, combining strong operational profitability with actual cash generation ability and significant market scale.

claude Opus 4.1 prompt  :

Growth Expectations (Next 3 Years):

  • Focus on companies with sustainable 5-20% annual growth
  • Avoided speculative high-growth names with >50% volatility
  • Prioritized companies with clear competitive advantages

Risk Management (Max 30% Drawdown):

Companies with betas below 1 reduce the risk of large price swings 

  • Selected companies with Beta < 1.2 (most under 1.0)
  • Strong free cash flow generation provides downside protection
  • Diversified revenue streams and essential products/services

     

    Filtered Companies: Best 3-Year Growth + Max 30% Drawdown Risk

    Technology Leaders (High Growth, Moderate Volatility)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Microsoft 45-50% ~$60-70B ~$3T 13.7% S&P 500 earnings growth expected in 2026 Beta ~0.9-1.0, defensive tech
    Apple 35-40% $108.8B ~$3.7T Stable 5-8% growth, services expansion Beta ~1.0, stable cash flows
    Alphabet (Google) 30-35% ~$60-70B ~$2T AI-driven growth, cloud expansion Beta ~1.0, advertising resilience

    Pharmaceutical Titans (Stable Growth, Low Risk)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Johnson & Johnson 30-40% ~$18-20B ~$400B Steady 5-7% growth Beta of 0.41, true defensive heavyweight
    Eli Lilly 30-35% ~$10-15B ~$800B+ GLP-1 drugs driving 15-20% growth Beta ~0.6-0.7, patent protection
    AbbVie 35-40% ~$15-18B ~$350B 20% profit growth predicted for 2026 Beta ~0.7, diversified pipeline
    Novo Nordisk 35-40% ~$15-20B ~$500B+ Obesity drugs fueling 20%+ growth Beta ~0.5-0.6, defensive healthcare

    Payment Processing (Consistent Growth, Low Volatility)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Visa ~55% ~$18-20B ~$500B+ 8-12% steady growth, digital payments Beta ~0.8-0.9, network effects
    Mastercard ~50% ~$10-12B ~$400B+ 10-15% growth, global expansion Beta ~0.9-1.0, recession-resistant

    Consumer Staples (Defensive, Steady Growth)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Procter & Gamble 20-25% ~$15-17B ~$400B 4-6% steady growth Beta ~0.5-0.6, defensive
    Coca-Cola 30-35% ~$9-11B ~$280B 3-5% steady growth Beta of 0.45, very low volatility
    PepsiCo 20-25% ~$7-9B ~$240B 4-6% steady growth Beta ~0.6, stable demand
    Colgate-Palmolive 20-25% ~$3-4B ~$100B 3-5% growth, expanding Naturals Beta of 0.48, low risk profile

    Enterprise Software (Strong Growth, Manageable Risk)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Oracle 35-40% ~$8-10B ~$400B+ Cloud transition driving 10-15% growth Beta ~0.9, enterprise stability
    Adobe 35-40% ~$7-8B ~$250B+ Creative Cloud dominance, AI integration Beta ~1.0-1.1, subscription model
    ServiceNow 25-30% ~$3-4B ~$180B+ 22.5% revenue growth, AI solutions Beta ~1.1, high retention

    Infrastructure & Utilities (Ultra-Defensive)

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Waste Management 25-30% ~$2-3B ~$80B 5-7% steady growth, ESG tailwinds Beta ~0.6, essential services
    NextEra Energy 25-30% ~$5-7B ~$160B 9% YoY revenue growth expected Beta ~0.5-0.6, renewable growth

    High-Quality Industrials

    Company EBITDA Margin FCF Market Cap 3-Year Growth Outlook Risk Profile
    Home Depot 20-25% ~$15-18B ~$400B 8% earnings growth rate Beta ~0.9, housing resilience
    Costco 20-25% ~$7-8B ~$400B 6-8% growth, membership model Beta ~0.7, defensive retail

    Key Selection Criteria Applied

    Growth Expectations (Next 3 Years):

    • Focus on companies with sustainable 5-20% annual growth
    • Avoided speculative high-growth names with >50% volatility
    • Prioritized companies with clear competitive advantages

    Risk Management (Max 30% Drawdown):

    • Companies with betas below 1 reduce the risk of large price swings
    • Selected companies with Beta < 1.2 (most under 1.0)
    • Strong free cash flow generation provides downside protection
    • Diversified revenue streams and essential products/services

    Excluded from Original List

    • Nvidia – Too volatile (Beta >1.5), despite strong growth
    • Amazon – Higher volatility, heavy capex cycle
    • Meta – Ad market sensitivity, regulatory risks
    • Netflix – Higher beta, streaming competition
    • Most REITs – Interest rate sensitivity despite high margins

    Top 5 Recommendations for Next 3 Years

    1. Microsoft – Best tech balance of growth and stability
    2. Eli Lilly – Exceptional pharma growth with defensive characteristics
    3. Visa – Secular growth in digital payments, network effects
    4. Johnson & Johnson – Ultimate defensive play with century-long legacy of innovation and stability
    5. Procter & Gamble – Consumer staples leader with pricing power

    Investment Criteria Summary

    These companies offer the best combination of:

    • ✅ Strong EBITDA margins (>20%)
    • ✅ Positive and growing free cash flow
    • ✅ Market caps >$5B providing liquidity
    • ✅ Expected growth of 5-20% annually
    • ✅ Beta mostly under 1.0, limiting drawdown risk to ~30%
    • ✅ Defensive business models with recurring revenues

    Tools and sources

    Tools :

    https://www.tradingview.com/screener/

    https://unusualwhales.com/stock/APH/financials

    https://chatgpt.com/

    https://claude.ai/

    https://www.perplexity.ai/

     

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