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 with these characteristics are our definition of a "blue-chip". That said, here are three quality compounders that deserve a spot on your list.
Meta (META)
Market Cap: $1.55 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?
- Customers are spending more money on its platform as its average revenue per user has increased by 29.9% annually over the last two years
- Share repurchases over the last three years enabled its annual earnings per share growth of 51.3% to outpace its revenue gains
- Strong free cash flow margin of 26.2% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
Meta’s stock price of $610.90 implies a valuation ratio of 11.5x forward EV/EBITDA. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
DoorDash (DASH)
Market Cap: $70.1 billion
Founded by Stanford students with the intent to build “the local, on-demand FedEx", DoorDash (NASDAQ: DASH) operates an on-demand food delivery platform.
Why Do We Love DASH?
- Orders have increased by an average of 22% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 931% annually, topping its revenue gains
- Free cash flow margin grew by 13 percentage points over the last few years, giving the company more chips to play with
At $161.30 per share, DoorDash trades at 19.2x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Fair Isaac Corporation (FICO)
Market Cap: $26.83 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 Will FICO Outperform?
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 24.6% exceeded its revenue gains over the last two years
- Robust free cash flow margin of 34.8% gives it many options for capital deployment
- Returns on capital are growing as management capitalizes on its market opportunities
Fair Isaac Corporation is trading at $1,132 per share, or 24.3x forward P/E. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
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 meeting 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 (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
