CQI V1.4

Compounding Quality Index — Moat Ranking

48 Companies | 7 Dimensions | 44 Sub-factors

Rating Date: March 2026 | Data Window: 2014-2025 (11 years)

v1.4: New C7 self-sustainability factor (C from 30→35), all 48 companies recalculated

Full Ranking

#	Company	Ticker	CQI	C7	Trend	Trend Driver	Report	Comment
1	Copart	CPRT	90	5	Execution gain	ADAS total loss rate ↑ + international expansion	Read	Two-sided auction network + irreplicable land bank — the only counter-cyclical monopolist
2	CME Group	CME	89	5	Stable	Derivatives clearing monopoly solid, interest rate volatility tailwind	Read	Defines what "derivatives market" means — definitional monopoly + Core PE masked by GAAP
3	VeriSign	VRSN	75	5	Stable	ICANN presumptive renewal = institutional perpetuity, AELP lawsuit is the only threat	Read	The closest to a perfect tollbooth in business history — .com exclusive operator + 7% contractual price hikes + 929 people running $1.66B
4	S&P Global	SPGI	75	5	Stable	Institutional lock-in solid, no change signals	Read	Basel III-locked rating duopoly, pricing power still largely untapped
5	Moody's	MCO	70	5	Stable	Rating institution shows no loosening	Read	Rating duopoly, MIS is a 60%+ OPM cash machine — MA growth is the key variable
6	FICO	FICO	69	4	Active erosion	FHFA approved VantageScore, opening institutional crack	Read	Institutional monopoly pricing being unlocked, but the institution itself is being opened
7	Microsoft	MSFT	69	3	Stable	Office/Azure lock-in solid, AI investment offsets	Read	Enterprise OS monopoly, but AI arms race is eating into margins
8	Alphabet	GOOGL	68	3	Execution gain	Gemini rolling out across all product lines	Read	Knowledge gateway tollbooth — Gemini ecosystem rollout is widening the AI moat
9	Amazon	AMZN	67	2.5	Execution gain	AWS + logistics + advertising triple flywheel accelerating	Read	Unmatched three-engine flywheel, but $200B CapEx is a faith test
10	Costco	COST	66	4.5	Execution gain	Member base still growing, 93% renewal rate holding	Read	Intentionally earns nothing on goods — 93% membership renewal and still growing
11	IDEXX	IDXX	66	4	Stable	Consumable lock-in model unchanged	Soon	Install the analyzer, lock in the consumables — a vet diagnostics razor-blade model
12	Meta	META	62	3	Stable	Ad targeting advantage solid, AI investment offsets	Read	3.9B user behavioral database — unmatched ad targeting precision
13	KLA Corp	KLAC	61	4	Structural widening	Advanced node physics → inspection density irreversibly rising	Read	Invisible yield gatekeeper — the smaller the chip, the more essential KLA becomes
14	Apple	AAPL	59	3.5	Structural erosion	Global antitrust dismantling walled garden (DMA/DOJ)	Read	Deepest consumer ecosystem, but regulators are dismantling the walled garden
15	Intuit	INTU	57	3	Structural erosion	AI tax prep threat + IRS Direct File eroding TurboTax quasi-institutional status	Read	SMB financial OS + tax data lock-in + 46K CPA distribution network, but AI is lowering tax prep barriers
16	ASML	ASML	56	3.5	Stable	EUV exclusive position unchanged	Read	The only lithography maker — humanity's most precise bottleneck
17	Cintas	CTAS	56	4	Stable	Density + cross-sell model stable	Soon	Uniforms + mats + first aid — each added layer doubles the lock-in
18	Visa	V	55	4	Structural erosion	FedNow/UPI real-time payments eroding + fee regulation	Read	World's largest payment network, but fee regulation + real-time payments rising
19	Adobe	ADBE	53	2.5	Structural erosion	Canva + AI generation tools eroding creative market	Read	Creative software industry standard, but AI lowers creation barriers — core moat logic challenged
20	Eaton	ETN	53	3.5	Structural widening	Electrification + DC power = decade-long structural demand	Read	Picks-and-shovels play for electrification — data center power demand is exploding
21	Arista	ANET	52	2	Structural widening	AI backend networking = new category structural demand	Read	AI backend networking demand deepening moat, but extreme customer concentration
22	ICE	ICE	51	4.5	Stable	Exchange network effects solid	Soon	Liquidity network effects + NYSE brand, but leverage + cyclicality drag compounding
23	NVIDIA	NVDA	49	2	Stable	CUDA deepening vs custom silicon threat, two forces offsetting	Read	CUDA ecosystem deepening short-term, but custom silicon is a long-term threat
24	Broadcom	AVGO	47	2.5	Stable	AI ASIC growth vs M&A integration risk	Read	King of acquisitions, but stock-based comp is quietly diluting shareholders
25	CoStar	CSGP	47	4	Stable	CRE data monopoly solid	Soon	CRE data monopoly at 47% OPM, but the Homes.com bet is consuming everything
26	Applied Materials	AMAT	46	3	Stable	Portfolio breadth stable but no pricing power improvement	Read	Widest equipment portfolio, but breadth doesn't equal pricing power
27	P&G	PG	44	4	Structural erosion	Private label penetration structurally rising	Read	69 consecutive years of dividend increases, but private label penetration keeps rising
28	Palantir	PLTR	44	2	Execution gain	AIP expanding Ontology customer coverage	Read	Ontology lock-in deepening via AIP, but SBC and valuation are two deep moats to cross
29	Lam Research	LRCX	43	2.5	Structural erosion	Etch share slowly eroding (TEL/AMAT encroaching)	Read	One of the etch big three — market share slowly slipping, a boiling frog
30	PTC	PTC	43	3	Structural erosion	Siemens PLM slowly encroaching + organic growth only 3.9%	Read	Five-layer institutional embedding protects 40% ARR, but platform score 3.25 = portfolio, not platform
31	Rollins	ROL	42	4	Stable	Route density economics unchanged	Soon	Pest control density economics — but eleven years of zero profit growth
32	Arm Holdings	ARM	41	3	Active erosion	RISC-V penetrating market by market (IoT→auto→server)	Read	An invisible semiconductor tax, but RISC-V is eroding it market by market
33	Salesforce	CRM	41	2.5	Structural erosion	SMB being eroded by HubSpot + flywheel paradox	Read	SaaS ecosystem standard but NRR undisclosed = growth quality questionable, pricing power scissors
34	TSMC	TSM	41	2.5	Stable	Tech lead widening vs geopolitical risk unchanged, offsetting	Read	Tech lead widening, but geopolitical risk persists — two forces offsetting
35	Domino's	DPZ	41	4	Stable	Delivery network density unchanged	Read	Largest pizza delivery network — value positioning limits pricing power
36	Vertiv	VRT	38	2	Execution gain	NVIDIA partnership deepening liquid cooling first-mover edge	Read	NVIDIA partnership deepening liquid cooling first-mover edge, but each platform gen reshuffles
37	Chipotle	CMG	37	3	Stable	Operational efficiency stable but no lock-in	Read	Fastest burrito assembly line, but zero customer lock-in
38	Fastenal	FAST	34	4	Stable	Channel lock-in stable but no pricing power	Soon	Quality without flair — locks in the channel, not the price
39	Starbucks	SBUX	31	2	Active erosion	Luckin in China + OPM collapse + brand premium damaged	Read	Luckin competition in China + OPM collapsing to single digits + brand premium eroding
40	PayPal	PYPL	27	1.5	Active erosion	Apple Pay + BNPL dual-front eroding branded checkout	Read	ROIC 33% but moat 5.2/10 and shrinking — identity crisis + branded checkout net contraction
41	Lululemon	LULU	24	2	Active erosion	Alo/Vuori encroaching + Americas comp negative 7 quarters + CEO vacancy	Read	ROIC 23% fortress-grade business at IPO-low PE, but brand erosion + CEO vacancy = direction unclear
42	UnitedHealth	UNH	22	3.5	Structural erosion	DOJ antitrust investigation + MCR deterioration + political pressure	Read	Healthcare infrastructure covering 150M people, but high C1/low B4 = regulation limits monetization
43	Hilton	HLT	17	3.5	Execution gain	Highest NUG in industry + Honors ecosystem expanding	Read	Highest NUG in hospitality, but one point of NUG decline changes valuation 7x
44	IHG	IHG	17	3.5	Stable	Franchise model solid but cycle-sensitive	Soon	True margins hidden by reporting structure — cyclicality is the Achilles' heel
45	Marriott	MAR	15	3.5	Stable	Brand portfolio stable	Read	Most hotel brands, but overshadowed by Hilton's growth velocity
46	Intel	INTC	12	1	Full collapse	CPU/GPU/foundry share declining across multiple lines	Read	CHIPS Act as a bankruptcy backstop, but losing share across multiple markets simultaneously
47	Royal Caribbean	RCL	11	2	Execution gain	Private destination expansion + record OPM	Read	Private destination expansion + record OPM, but built on top of the cycle
48	Super Micro	SMCI	10	1	Active erosion	Gross margin declining from 18% to 6%	Read	Gross margin declining from 18% to 6% — assembler fate caps the profit ceiling

C7 Self-Sustainability Distribution

C7 Score	Meaning	Count	Representative Companies
5	Perpetual	5	CPRT, CME, VRSN, SPGI, MCO
4–4.5	Self-reinforcing	12	FICO, COST, IDXX, KLAC, CTAS, V, ICE, CSGP, PG, ROL, DPZ, FAST
3–3.5	Hybrid	15	MSFT, GOOGL, META, AAPL, INTU, ASML, ETN, AMAT, PTC, ARM, CMG, UNH, HLT, IHG, MAR
2–2.5	Innovation-dependent	13	AMZN, ADBE, ANET, NVDA, AVGO, PLTR, LRCX, CRM, TSM, VRT, SBUX, LULU, RCL
1–1.5	Content-consuming	3	PYPL, INTC, SMCI

Key Findings

The top five (CPRT/CME/VRSN/SPGI/MCO) all have C7=5 perpetual moats — the moat persists even if the company stops all R&D spending. CPRT's land bank and auction network are self-sustaining, CME's derivatives clearing is institutionally embedded, VRSN's .com exclusive is ICANN-locked, SPGI and MCO's ratings are mandated by Basel III. These aren't "hard to replicate" — the entry point to even try doesn't exist.

Trend Distribution

Trend	Meaning	Driver	Count	%	Companies
↑ Structural widening	Industry structure/physics irreversibly deepening moat	Management-independent	3	6%	KLAC, ETN, ANET
↗ Execution gain	Company actively deepening moat via share/ecosystem/product	Execution-dependent	8	17%	CPRT, GOOGL, AMZN, COST, PLTR, VRT, HLT, RCL
→ Stable	Moat is solid with no material change	—	21	44%	CME, VRSN, SPGI, MCO, MSFT, IDXX, META, ASML, CTAS, ICE, NVDA, AVGO, CSGP, AMAT, ROL, TSM, DPZ, CMG, FAST, IHG, MAR
↘ Structural erosion	Regulation/substitutes/competition structurally eroding moat	Hard to reverse	9	19%	AAPL, INTU, V, ADBE, PG, LRCX, PTC, CRM, UNH
↓ Active erosion	Specific competitors/substitutes actively breaching moat	Clear threat identified	6	13%	FICO, ARM, SBUX, PYPL, LULU, SMCI
⇊ Full collapse	Moat evaporating across multiple fronts	Multiple factors compounding	1	2%	INTC

Methodology

The Compounding Quality Index (CQI) evaluates long-term compounding quality across 7 dimensions, scoring up to 100 with 44 quantitative factors (including C7 self-sustainability) over an 11-year data window (2014-2025). Formula: CQI = round(((B+C)×D1×T - 10) / 60 × 100).

Dimension	Assessment	Core Question
Pricing Power	Can it raise prices above inflation without losing customers?	How many customers leave if prices rise 10%?
Customer Stickiness	Depth of customer lock-in x revenue recurrence	How much time and money does it cost to switch?
Moat	Institutional embedding + network effects + ecosystem lock-in (incl. C7 self-sustainability)	How many years would a competitor need to catch up?
Growth Runway	Revenue engine clarity x remaining TAM	How many times can revenue multiply in 10 years?
Capital Discipline	Margin elasticity + capital allocation efficiency	Is the cash being deployed wisely?
Competitive Barriers	Data flywheel + economies of scale + physical barriers	How much would it cost a new entrant to replicate?
C7 Self-Sustainability	How long the moat persists if all investment stops	If the entire management team is replaced and R&D goes to zero, does the moat survive?