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.
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.
Pinterest (PINS)
Market Cap: $10.7 billion
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
What Makes PINS Stand Out?
- Monthly Active Users have grown by 11% annually, allowing for more profitable cross-selling opportunities if it can build complementary products and features
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 36.4% over the last three years outstripped its revenue performance
- Robust free cash flow margin of 27.5% gives it many options for capital deployment, and its rising cash conversion increases its margin of safety
Pinterest is trading at $18.89 per share, or 13.6x forward EV/EBITDA. Is now a good time to buy? See for yourself in our full research report, it’s free.
Philip Morris (PM)
Market Cap: $296.9 billion
Founded in 1847, Philip Morris International (NYSE: PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.
Why Is PM a Top Pick?
- Products command premium prices and lead to a best-in-class gross margin of 67%
- Excellent operating margin of 37% highlights the efficiency of its business model, and its profits increased over the last year as it scaled
- Strong free cash flow margin of 26.6% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
At $189.40 per share, Philip Morris trades at 21.8x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Nextpower (NXT)
Market Cap: $12.27 billion
With its technology playing a key role in the massive 1.2 gigawatt Noor Abu Dhabi solar farm project, Nextpower (NASDAQ: NXT) is a provider of solar tracker systems that help solar panels follow the sun.
Why Should You Buy NXT?
- Impressive 15.1% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Free cash flow margin increased by 23.4 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are climbing as management makes more lucrative bets
Nextpower’s stock price of $81.05 implies a valuation ratio of 16.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
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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 Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
