Strong Customer Loyalty Sustainable Competitive Advantages
Potentially High Cash Returns on Invested Capital Excellent Management Teams
Prospero believes that companies with a high recurring revenue element to their business such as a monthly subscription payment or regular use of a disposable product are more stable and, as a result, are often more profitable and more capable of sustained growth than companies that rely on large, one-time sales. For example, continuing customer relationships enhance a company's ability to successfully introduce new products and services. Recurring revenues also provide more forward visibility about the future prospects of a business. This enables disciplined investors with long-term investment horizons such as Prospero to benefit when other public market investors misprice a security due to non-recurring setbacks.