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If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. So when we looked at REA Group (ASX:REA), they do have a high ROCE, but we weren't exactly elate...
>>> Read more: REA Group (ASX:REA) May Have Issues Allocating Its Capital
>>> Read more: REA Group (ASX:REA) May Have Issues Allocating Its Capital
