High earnings businesses with low capital requirements: The first example refers to a business like See’s Candies, a chain of candy and chocolate stores in California that Mr Buffett owns. These businesses can’t, for any extended period, reinvest a large portion of their earnings internally at high rates of return. However, in light of the firm’s pricing power, See’s Candies’ earnings keep growing without needing incremental capital, thus steadily delivering a high return on (rather low) capital employed.
