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 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.
Meta (META)
Market Cap: $1.56 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 Top Pick?
- Monetization efforts are paying off as its average revenue per user has grown by 14.8% annually over the last two years
- Share buybacks catapulted its annual earnings per share growth to 40.1%, which outperformed its revenue gains over the last three years
- Strong free cash flow margin of 26.9% enables it to reinvest or return capital consistently
At $620.65 per share, Meta trades at 12x forward EV/EBITDA. Is now the right time to buy? See for yourself in our full research report, it’s free.
Roku (ROKU)
Market Cap: $15.32 billion
With a name meaning six in Japanese because it was the founder's sixth company that he started, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.
Why Is ROKU Interesting?
- Has the opportunity to boost monetization through new features and premium offerings as its total hours streamed have grown by 18.7% annually over the last two years
- Performance over the past three years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 51.2% outpaced its revenue gains
- Free cash flow margin expanded by 14 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Roku is trading at $103.76 per share, or 26.6x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Reddit (RDDT)
Market Cap: $43.78 billion
Founded in 2005 by two University of Virginia roommates, Reddit (NYSE: RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.
Why Will RDDT Outperform?
- Domestic Daily Active Visitors have increased by an average of 32.3% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Earnings per share have massively outperformed its peers over the last three years, increasing by 40.2% annually
- Free cash flow margin expanded by 41.8 percentage points over the last few years, providing additional flexibility for investments and share buybacks/dividends
Reddit’s stock price of $231.20 implies a valuation ratio of 40.5x forward EV/EBITDA. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
