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Haywood Kelly at Morningstar has an interesting article on corporate consistency. He found that companies with high sales growth rates tend to revert to the mean fairly quickly. But companies that are able to maintain high returns-on-equity tend to maintain them. This makes sense since sales growth can simply be a part of luck, but ROE is a better measure of management. A skilled management is likely to stay skilled.

Posted by edelfenbein at September 23, 2005 2:03 PM