Tecnoglass Inc (NYSE:TGLS) Shines as a Top Quality Pick in Caviar Cruise Screening Strategy

The Caviar Cruise stock screening strategy is based on quality investing, a method that favors companies with solid fundamentals, lasting competitive edges, and steady growth. While value investing looks for undervalued stocks, quality investing targets businesses with high profitability, smart capital use, and stability through economic ups and downs. The Caviar Cruise screen uses strict financial checks to find these companies, making sure they meet high marks for revenue growth, earnings quality, return on invested capital (ROIC), and reasonable debt levels.

TECNOGLASS INC (NYSE:TGLS) stands out as a strong pick under this strategy, fitting many of the key traits of quality investing.

Key Strengths of Tecnoglass

Solid Revenue and EBIT Growth

• Revenue Growth (5Y CAGR): 7.23% – Beats the Caviar Cruise minimum of 5%, showing steady sales growth.
• EBIT Growth (5Y CAGR): 31.02% – Far exceeds the 5% target, highlighting strong operational performance and profit growth. Notably, EBIT growth is faster than revenue growth, a sign of better margins and pricing strength, common in high-quality businesses.

High Return on Invested Capital (ROIC)

• ROIC (Ex Cash+Goodwill): 28.02% – Much higher than the 15% standard, showing excellent capital use. A high ROIC means Tecnoglass earns strong returns on its investments, reinforcing its competitive edge in the architectural glass and aluminum products sector.

Sound Debt Position

• Debt-to-Free Cash Flow: 1.29 – Suggests the company could pay off all its debt in just over a year using current free cash flow. This ratio is much better than the Caviar Cruise maximum of 5, reflecting good financial health and low debt risk.

Earnings Quality and Reinvestment Success

• 5-Year Average Profit Quality: 90.99% – Near the ideal 100%, meaning almost all reported net income turns into free cash flow. This high rate shows earnings are real, not just on paper.
• EBIT Growth > Revenue Growth – Confirms that profit gains come not just from higher sales but also from better operations and cost control.

Fundamental Analysis Summary

Tecnoglass earns a solid fundamental rating of 7 out of 10, with top scores in profitability (9/10) and financial health (7/10). Key points include:

• Leading margins: Operating margin of 26.65% and profit margin of 18.89%, beating most competitors.
• Strong financials: An Altman-Z score of 7.36 and a low debt-to-equity ratio (0.16) show stability.
• Growth path: While recent revenue growth is modest (6.83% YoY), long-term EPS growth (39.54% CAGR over 5 years) is strong. Analysts expect earnings to grow at 11.26% yearly.

For more details on Tecnoglass’s finances, see the full fundamental analysis report here.

Why This Matters for Quality Investors

The Caviar Cruise approach focuses on companies that can maintain growth, earn high returns on capital, and keep finances in check—qualities Tecnoglass has. Its ability to turn profits into cash, along with low debt and growing margins, makes it a resilient business able to handle economic shifts. Its global role in architectural solutions also fits the quality investing preference for firms with long-term demand.

Finding More Quality Picks

The Caviar Cruise screen highlights other high-quality stocks that meet similar tough standards. To see more investment options, check the full screen results here.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial advisor before making investment decisions.