Quality compounders are flywheels. Said differently, they’re businesses that generate heaps of profits and consistently reinvest them to produce even more profits. Rinse and repeat.
We love companies like this because something about their business models makes them special. On that note, here are three quality compounders that could amplify your portfolio’s returns.
Sterling (STRL)
Market Cap: $14.88 billion
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ: STRL) provides civil infrastructure construction.
Why Is STRL a Good Business?
- Impressive 28.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- STRL is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders, and its growing cash flow gives it even more resources to deploy
- Improving returns on capital reflect management’s ability to monetize investments
Sterling’s stock price of $487.50 implies a valuation ratio of 20.6x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Woodward (WWD)
Market Cap: $20.44 billion
Initially designing controls for water wheels in the early 1900s, Woodward (NASDAQ: WWD) designs, services, and manufactures energy control products and optimization solutions.
Why Do We Love WWD?
- Impressive 13.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Share repurchases over the last two years enabled its annual earnings per share growth of 22.5% to outpace its revenue gains
Woodward is trading at $345.91 per share, or 33.5x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Fair Isaac Corporation (FICO)
Market Cap: $20.13 billion
Creator of the three-digit number that can determine whether you get a mortgage or credit card, Fair Isaac Corporation (NYSE: FICO) develops analytics software and the widely used FICO Score, which is the standard measure of consumer credit risk in the United States.
Why Should You Buy FICO?
- Share repurchases over the last two years enabled its annual earnings per share growth of 33.8% to outpace its revenue gains
- Strong free cash flow margin of 35.8% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
- Returns on capital are growing as management capitalizes on its market opportunities
At $935.42 per share, Fair Isaac Corporation trades at 22.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
