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3 Quality Compounders to Keep an Eye On
Quality compounders are well-oiled machines. Their competitive advantages allow them to make profits consistently and reinvest them into projects that generate even more profits, creating a virtuous cycle of returns.
We love companies like this because something about their business models makes them special. Keeping that in mind, here are three quality compounders that deserve a spot on your list.
Meta (META)
Market Cap: $1.68 trillion
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ:META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Why Do We Love META?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 27.1% annual growth in its average revenue per user
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 61.8%, and its operating leverage amplified its profits over the last few years
- Share buybacks catapulted its annual earnings per share growth to 56%, which outperformed its revenue gains over the last three years
At $661.10 per share, Meta trades at 11.1x forward EV/EBITDA. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Uber (UBER)
Market Cap: $146.7 billion
Notoriously funded with $7.7 billion from the Softbank Vision Fund, Uber (NYSE:UBER) operates a platform of on-demand services such as ride-hailing, food delivery, and freight.
Why Are We Fans of UBER?
- Has the opportunity to boost monetization through new features and premium offerings as its monthly active platform consumers have grown by 15.4% annually over the last two years
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 60.8% annually, topping its revenue gains
- Free cash flow margin expanded by 15.3 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Uber is trading at $72.20 per share, or 13.4x forward EV/EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Monster (MNST)
Market Cap: $95.85 billion
Founded in 2002 as a natural soda and juice company, Monster Beverage (NASDAQ:MNST) is a pioneer of the energy drink category, and its Monster Energy brand targets a young, active demographic.
Why Are We Bullish on MNST?
- Healthy operating margin of 28.4% shows it’s a well-run company with efficient processes, and it turbocharged its profits by achieving some fixed cost leverage
- Robust free cash flow margin of 23.8% gives it many options for capital deployment
- Industry-leading 36.2% return on capital demonstrates management’s skill in finding high-return investments, and its returns are growing as it capitalizes on even better market opportunities
Monster’s stock price of $98.19 implies a valuation ratio of 41.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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 Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.