Moats and 12.5% CAGR: the companies nobody is watching

Hunting for the 12.5% moat company off the radar

Companies growing at 12.5% compounded annually with a defensible competitive advantage don't only hide in Nvidia or ASML. They're also in Europe, Canada, Japan, Korea or Australia. Finding them is another matter: databases and AI models don't cover non-US markets well, and anything that doesn't show up in American screeners has to be done by hand.

High P/E with a moat, or cheap with a dividend

There are two schools of thought. One holds that paying a P/E of 30 for a company growing EPS at 14% a year is rational if the moat is solid and the horizon is two decades. The math: if the exit P/E converges to 22, the compounded return lands at 12.5%. With an entry P/E of 15 and the same exit, it's 16%. At those levels, double the entry P/E gets diluted: what matters is EPS growth.

The other school prefers buying beaten-down stocks and collecting dividends while you wait. It's the classic clash: growth vs. value. The moat logic tilts the balance toward the former, but the psychology of an investor who has watched their portfolio fall 40% isn't cured by spreadsheets.

The skepticism of someone who has seen -40%

Seeing 40% of your portfolio in the red hurts, even with a two-decade horizon. And dividends are all well and good in theory until the taxman takes his cut. That's why part of the analysis favors local or mature REITs with predictable income, even if they don't grow at 12.5%.

The practical conclusion: opportunities with a moat and 12.5% aren't on the usual lists, but finding them outside the radar of shared data is a job for patience and spreadsheets. Whoever does it first will collect the return. Whoever arrives later will buy the fairy tale at a premium.