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Analyzing Free Cash Flow Growth and Return on Invested Capital in Stock Valuation
The chapter explores the significance of free cash flow growth and return on invested capital in determining stock valuation, with examples from companies like Microsoft and European companies such as ASML and LVMH. It emphasizes the importance of understanding the sustainability and nuances behind high return on invested capital figures and cautions against assuming continued success solely based on past performance. The chapter highlights the necessity of analyzing a stock's story beyond numerical metrics to make informed investment decisions.