Roper: A resilient cashflow compounder in the software space with inflecting growth

A unicorn: Software compounding business, generating $7bn revenues across 29 niches with HSD/DD growth and 30% cash flow margin

Welcome to the 8th investment case and 7th resilience idea on Crack the Market (and the most comprehensive Roper investment case you will find online)! Join me as I dissect one of the biggest and most profitable vertical software business, a defensive titan with a singular focus on driving strong and compounding FCF.

Twice a week, I will release deep dives into stocks and sectors that fit into the three themes that I see winning in this age of tariffs and deglobalization: resilience, sovereignty & reshoring, China. I will then deep dive into the opportunities in the AI data center value chain.

Take advantage of this once in a generation opportunity to build long term wealth by investing in great stocks that will deliver returns for your portfolio for years to come.

You can already read my first 7 deep dives, all of which I see as winners in this new world of tariffs and deglobalization:

• ASML (reshoring & China idea): The most innovative company in the world will 2.5x its EPS by 2030.

• LKQ (resilience idea): The most defensive business in the auto industry is a tariff winner and could become a compounder.

• Atlas Copco (resilience & reshoring idea): The best industrials business in the world is on sale, extremely resilient and will benefit from US reshoring.

• Badger Meter (resilience idea): The perfect business in the perfect end market, water meters are the definition of resilience.

• Knorr Bremse (resilience idea): Who knew making brakes was this lucrative? Rerating with self help story and upside from German infra plan.

• Flex (reshoring idea): The electronics manufacturing giant building Nvidia’s servers and enabling reshoring is becoming a better business.

• Itron (resilience & reshoring idea): Riding the grid investment super cycle and enabling smart grids.

After reading this article, you will understand why this company is so special thanks to a unique governance model, what it does, why it is so defensive within the software/tech space and why it may be at an inflection point after many years of lower M&A in a high interest environment.

This company is a diversified tech holding enabling digitalization through dozens of vertical software niches, with the entire organization singularly focused on driving sustainable growth and compounding cashflow, with growth that may just be at an inflection point thanks to a unique M&A playbook and fading headwinds, and a defensive positioning (mission critical software and 85% reoccuring revenue) that provides a safe haven in an uncertain global environment.

In this article I go through:

1. Roper’s business and how it dominates many vertical software niches.

2. How the company has transformed from an industrial company to a vertical software giant, guided by a unique financial metric.

3. How the company aims to deliver HSD/DD growth through the cycle

4. How its unique cash flow compounding focus makes it a unicorn in the software world with a world class capital allocation flywheel that is poised to accelerate.

5. Why its governance model and business model make it a defensive cash machine in this uncertain macro environment.

Roper Investment Case