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 with these characteristics are our definition of a “blue-chip”. Keeping that in mind, here are three quality compounders that could amplify your portfolio’s returns.
Sterling (STRL)
Market Cap: $20.85 billion
Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.
Why Is STRL a Good Business?
- Market share has increased this cycle as its 19.8% annual revenue growth over the last two years was exceptional
- Strong free cash flow margin of 15.6% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
- Returns on capital are growing as management capitalizes on its market opportunities
Sterling is trading at $690.04 per share, or 33.3x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Hubbell (HUBB)
Market Cap: $25.57 billion
A respected player in the electrical segment, Hubbell (NYSE:HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets.
Why Will HUBB Beat the Market?
- Solid 10.2% annual revenue growth over the last five years indicates its offerings solve complex business issues
- Share buybacks catapulted its annual earnings per share growth to 19.7%, which outperformed its revenue gains over the last five years
- Free cash flow margin increased by 7.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Hubbell’s stock price of $483.73 implies a valuation ratio of 23.1x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Insulet (PODD)
Market Cap: $11.02 billion
Revolutionizing diabetes care with its tubeless "Pod" technology, Insulet (NASDAQ:PODD) develops and manufactures innovative insulin delivery systems for people with diabetes, primarily through its Omnipod product line.
Why Will PODD Outperform?
- Steady constant currency growth over the past two years shows the company can pursue its global ambitions, even in uncertain economic times
- Free cash flow margin increased by 25.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Rising returns on capital show management is finding more attractive investment opportunities
At $159.25 per share, Insulet trades at 24.2x forward P/E. Is now the right time to buy? Find out in our full 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.