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3 Quality Compounders with Impressive Fundamentals
A quality compounder is a business that not only sports durable competitive advantages but also builds on its success by consistently reinvesting its profits at high returns.
Companies such as these set the gold standard in public market investing. On that note, here are three quality compounders that could turbocharge your returns.
Meta (META)
Market Cap: $1.67 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 Is META a Good Business?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 24.4% annual growth in its average revenue per user
- Disciplined cost controls and effective management resulted in a strong two-year EBITDA margin of 60.5%, and its operating leverage amplified its profits over the last few years
- Share buybacks catapulted its annual earnings per share growth to 51.1%, which outperformed its revenue gains over the last three years
Meta’s stock price of $650.33 implies a valuation ratio of 10x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
DexCom (DXCM)
Market Cap: $31.65 billion
Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ:DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.
What Makes DXCM Stand Out?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 12% over the past two years
- Free cash flow margin expanded by 20.2 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Returns on capital are climbing as management makes more lucrative bets
At $84.20 per share, DexCom trades at 30x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
ATI (ATI)
Market Cap: $28.12 billion
With its materials flying in nearly every commercial and military aircraft in service today, ATI (NYSE:ATI) produces highly specialized materials and components for aerospace, defense, medical, and energy applications using advanced metallurgy and manufacturing processes.
Why Should You Buy ATI?
- Annual revenue growth of 12.9% over the last five years was superb and indicates its market share increased during this cycle
- Share buybacks catapulted its annual earnings per share growth to 32.9%, which outperformed its revenue gains over the last two years
- Free cash flow margin expanded by 18.8 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
ATI is trading at $210.09 per share, or 35.7x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 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.