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 turbocharge your returns.
Sea (SE)
Market Cap: $52.48 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 Is SE a Good Business?
- Paying Users have increased by an average of 22.7% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Grip over its ecosystem is highlighted by its ability to grow engagement while increasing the average revenue per user by 12.6% annually
- Free cash flow margin expanded by 18.4 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Sea is trading at $90.80 per share, or 3.9x forward price-to-gross profit. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Fair Isaac Corporation (FICO)
Market Cap: $27.49 billion
Creator of the three-digit number that can determine whether you get a mortgage or credit card, Fair Isaac Corporation (NYSE: FICO) develops analytics software and the widely used FICO Score, which is the standard measure of consumer credit risk in the United States.
Why Are We Backing FICO?
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 29.3% exceeded its revenue gains over the last two years
- Robust free cash flow margin of 34% gives it many options for capital deployment, and its recently improved profitability means it has even more resources to invest or distribute
- Rising returns on capital show management is finding more attractive investment opportunities
At $1,170 per share, Fair Isaac Corporation trades at 23.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
ATI (ATI)
Market Cap: $27.23 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 Do We Love ATI?
- Impressive 11.1% annual revenue growth over the last five years indicates it’s winning market share this cycle
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin grew by 21.7 percentage points over the last five years, giving the company more chips to play with
ATI’s stock price of $196.60 implies a valuation ratio of 43.4x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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.
Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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.
