Fortune Brands Home & Security, Inc.
Thesis
Fortune Brands is attractively priced at around 12 times current earnings, which is unusual for a quality compounder. The company has strong brands and generates high returns on tangible capital, suggesting it can compound earnings faster than average. Even if the housing cycle does not recover, the stock should still perform well at this valuation, and if housing repair and remodel activity picks up, earnings could accelerate significantly.
Did it work?
The stock price increased by 137.6%, which aligns with the long thesis that Fortune Brands is attractively priced and capable of compounding earnings. The significant price appreciation suggests that the market has recognized the company's strong brand value and potential for earnings growth, validating the thesis. Given the substantial return, it is clear that the investment thesis played out successfully.
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