Growth alone tells you very little.
The better question is what a company earns on the capital required to produce that growth.
Two businesses can both grow revenue 15%. One may need massive capex, acquisitions, working capital, and stock compensation to get there. The other may convert incremental investment into considerably more operating profit and free cash flow.
Those are entirely different machines.
Today’s Intel Drop searches for companies where the return on incremental investment appears to be rising before the improvement is fully visible in headline ROIC.
Use this to find businesses where the next dollar invested may be more valuable than the last one.
💡PROMPT TEXT:
(copy & paste the below text into your preferred AI model: ChatGPT, Claude, Gemini, Perplexity, Grok, Meta, etc.)
You are a senior buy-side equity analyst running a “Reinvestment Yield” stock screen as of October 26, 2026. GOAL: Identify 12–20 U.S.-listed companies where incremental investment is producing increasingly attractive economic returns. Do NOT simply screen for high historical ROIC. Find companies where the RETURN ON NEW CAPITAL appears to be improving. Use the latest available: - 10-K and 10-Q filings - Earnings releases - Earnings transcripts - Capital expenditures - R&D - Acquisitions - Working capital - Operating income - NOPAT - Free cash flow - Segment disclosures - Analyst estimates STEP 1 — DEFINE TOTAL REINVESTMENT For every company identify material investment in: - Capital expenditures - R&D - Acquisitions - Working capital - Capitalized software - New stores / locations - Data centers - Manufacturing capacity - Sales infrastructure Separate where possible: MAINTENANCE INVESTMENT from GROWTH INVESTMENT. STEP 2 — MEASURE INCREMENTAL ECONOMIC OUTPUT Track over 3–5 years: - Revenue - Gross profit - Operating income - NOPAT - Free cash flow Determine how much additional operating profit has been generated relative to incremental capital deployed. STEP 3 — ESTIMATE RETURN ON INCREMENTAL INVESTED CAPITAL Where credible data exist, calculate or approximate: Incremental NOPAT divided by Incremental Invested Capital. Use rolling multi-year periods when one-year figures are distorted. Classify: - Exceptional - Strong - Acceptable - Weak - Value Destructive Do not create false precision. STEP 4 — IDENTIFY THE DRIVER Determine what is improving returns: - Higher utilization - Better pricing - Scale - Automation - AI productivity - New products - Better mix - Lower customer acquisition cost - Better inventory turns - Greater asset efficiency STEP 5 — TEST WHETHER RETURNS ARE STRUCTURAL Reject apparent improvements caused mainly by: - One-time tax effects - Asset sales - Temporary capex reductions - Underinvestment - Large restructuring - Acquisition accounting - Cyclical peak margins STEP 6 — ANALYZE CAPITAL INTENSITY Calculate or estimate: - Capex / Revenue - Invested Capital / Revenue - FCF / Invested Capital Determine whether capital intensity is: - Falling - Stable - Rising The strongest candidates grow economic output faster than required capital. STEP 7 — CHECK FUTURE REINVESTMENT RUNWAY High returns matter most when the company can deploy additional capital at similar returns. Evaluate: - Market size - Geographic expansion - Capacity - Product extensions - Customer penetration - Competitive position Classify runway: - Long - Moderate - Limited STEP 8 — COMPARE WITH COST OF CAPITAL Estimate conceptually whether incremental returns are: - Far above cost of capital - Moderately above - Near - Below Do not pretend to know a precise WACC when inputs are uncertain. STEP 9 — CHECK CONSENSUS AWARENESS Compare: - EPS estimates - FCF estimates - Margin estimates - Recent analyst revisions - Valuation - 90-day stock performance Determine whether improving capital efficiency appears: - Underappreciated - Partially Recognized - Fully Priced STEP 10 — SCORE EACH COMPANY Assign: - Incremental ROIC: 1–5 - Capital Efficiency Trend: 1–5 - FCF Conversion: 1–5 - Reinvestment Runway: 1–5 - Competitive Advantage: 1–5 - Balance-Sheet Quality: 1–5 - Consensus Blind Spot: 1–5 - Valuation Support: 1–5 Calculate: REINVESTMENT YIELD SCORE: 1–10 BUILD THE REINVESTMENT YIELD TABLE: - Ticker - Company - Sector - Primary Reinvestment Type - Capital Intensity Trend - Incremental Profit Trend - Estimated Incremental ROIC - Reinvestment Runway - FCF Conversion - Consensus Awareness - Next Catalyst - Opportunity Score - Primary Invalidation Risk THEN IDENTIFY: 1. Five strongest reinvestment-yield opportunities 2. Three companies where incremental returns are improving faster than headline margins 3. Three high-growth companies requiring too much capital 4. Three asset-light businesses with unusually attractive reinvestment economics 5. Two capital-intensive companies whose economics are improving materially 6. Two companies with excellent current ROIC but limited future reinvestment runway Clearly distinguish: - Reported facts - Calculations - Estimates - Interpretation Never invent capex, invested capital, NOPAT, or analyst estimates. Output in a clean table + 3–5 sentence explanation why this matters right now.
END PROMPT
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