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.
Sea (SE)
Market Cap: $50.91 billion
Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.
Why Will SE Outperform?
- Paying Users have grown by 24.9% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 60.9% annually, topping its revenue gains
- Free cash flow margin increased by 30.7 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Sea’s stock price of $85.69 implies a valuation ratio of 12.7x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Hubbell (HUBB)
Market Cap: $24.85 billion
A respected player in the electrical segment, Hubbell (NYSE: HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Why Should You Buy HUBB?
- 9.7% annual revenue growth over the last five years surpassed the sector average as its offerings resonated with customers
- Highly efficient business model is illustrated by its impressive 17.6% operating margin, and it turbocharged its profits by achieving some fixed cost leverage
- Additional sales over the last five years increased its profitability as the 19.2% annual growth in its earnings per share outpaced its revenue
Hubbell is trading at $467.38 per share, or 23.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Woodward (WWD)
Market Cap: $21.27 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 Will WWD Beat the Market?
- Impressive 10.9% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Operating margin expanded by 4.3 percentage points over the last five years as it scaled and became more efficient
- Earnings per share grew by 29.4% annually over the last two years, massively outpacing its peers
At $356.88 per share, Woodward trades at 41x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
