3 Quality Compounders with Impressive Fundamentals
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.
Companies such as these set the gold standard in public market investing. On that note, here are three quality compounders that could amplify your portfolio’s returns.
Sea (SE)
Market Cap: $82.43 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 Do We Love SE?
- Paying Users are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 42.6% annually, topping its revenue gains
- Free cash flow margin jumped by 36.3 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Sea is trading at $139.55 per share, or 22.2x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
TransDigm (TDG)
Market Cap: $78.02 billion
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE:TDG) develops and manufactures components and systems for military and commercial aviation.
Why Should You Buy TDG?
- Average organic revenue growth of 12% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Additional sales over the last two years increased its profitability as the 20.2% annual growth in its earnings per share outpaced its revenue
- Strong free cash flow margin of 19.6% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
TransDigm’s stock price of $1,389 implies a valuation ratio of 35.8x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Dycom (DY)
Market Cap: $10.27 billion
Working alongside some of the most popular mobile carriers in the world, Dycom (NYSE:DY) builds and maintains telecommunications infrastructure.
Why Will DY Outperform?
- Annual revenue growth of 11.8% over the past two years was outstanding, reflecting market share gains this cycle
- Operating margin expanded by 5.9 percentage points over the last five years as it scaled and became more efficient
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 33.3% exceeded its revenue gains over the last five years
At $354.45 per share, Dycom trades at 28.7x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Stocks We Like Even More
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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 Kadant (+351% five-year return). Find your next big winner with StockStory today.