This 1 Stock Could Explode 10-Fold in the Next Decade - Here's Why

What trends should we look for if we want to identify stocks that can multiply in value over the long term? Ideally, a business will show two trends in order to achieve long-term value multiplication. Firstly, a high return on capital employed (ROCE) indicating it can use capital efficiently. Then, a track record of reinvesting at high returns. This indicates some level of competitive advantage. So when considering Interpublic Group of Companies (NYSE:IPG), we see ROCE is a useful metric.

For those that aren't familiar, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. The formula for this calculation on Interpublic Group of Companies is: Return on Capital Employed (ROCE) = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities).Analysts provided their revised outlook on the business, with earnings per share growth of 52%. On average, they are expecting earnings per share(eps) to grow by -36% per year, over the next three years.

If we look to the trend of the last three years, Interpublic Group of Companies's ROCE values show that the business has been obtaining fairly high returns on capital, which is greatly appreciated by all who invested in this company. In comparison to the overall industry, Interpublic Group of Companies has a ROCE of 20%, which is above 9.9% for the Media industry, which makes it more competitive. Given the company has also proven its ability to reinvest at high returns, it may be one thing to watch for if the market is valuing this stock accurately at today's price.