Before picking individual stocks, you must have a firm grasp of the metrics that drive long-term value.

• ROIC (Return on Invested Capital): This is arguably the most important metric for quality. It tells you how efficiently a company turns capital into profit. Look for companies that consistently exceed their WACC (Weighted Average Cost of Capital).

• Free Cash Flow (FCF): Earnings can be manipulated by accounting; cash flow is harder to hide. Focus on FCF Yield to see how much cash is available for dividends, buybacks, or reinvestment.

• CAGR (Compound Annual Growth Rate): Understand how small growth rates compound over 5–10 years.