3 Quality Compounders to Own for Decades
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. Keeping that in mind, here are three quality compounders that could turbocharge your returns.
Netflix (NFLX)
Market Cap: $322.3 billion
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Why Will NFLX Beat the Market?
- Has the opportunity to boost monetization through new features and premium offerings as its global streaming paid memberships have grown by 15.1% annually over the last two years
- Excellent EBITDA margin of 31.2% highlights the efficiency of its business model, and its operating leverage amplified its profits over the last few years
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
At $77.30 per share, Netflix trades at 17.8x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Howmet (HWM)
Market Cap: $91.57 billion
Inventing the first forged aluminum truck wheel, Howmet (NYSE:HWM) specializes in lightweight metals engineering and manufacturing multi-material components used in vehicles.
Why Do We Love HWM?
- Impressive 13.8% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Share buybacks catapulted its annual earnings per share growth to 42.8%, which outperformed its revenue gains over the last two years
- Free cash flow margin increased by 12.7 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Howmet’s stock price of $230.85 implies a valuation ratio of 39.1x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Amphenol (APH)
Market Cap: $206.9 billion
With over 90 years of connecting the world's technologies, Amphenol (NYSE:APH) designs and manufactures connectors, cables, sensors, and interconnect systems that enable electrical and electronic connections across virtually every industry.
What Makes APH Stand Out?
- Annual revenue growth of 47.2% over the last two years was superb and indicates its market share increased during this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 62.1% annually, topping its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
Amphenol is trading at $83.93 per share, or 27.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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 meet 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.