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 deserve a spot on your list.
Uber (UBER)
Market Cap: $153.6 billion
Notoriously funded with $7.7 billion from the Softbank Vision Fund, Uber (NYSE: UBER) operates a platform of on-demand services such as ride-hailing, food delivery, and freight.
Why Are We Positive On UBER?
- Monthly Active Platform Consumers are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 60.8% over the last three years outstripped its revenue performance
- Free cash flow margin increased by 15.3 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Uber is trading at $75.45 per share, or 13.9x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
TransDigm (TDG)
Market Cap: $67.96 billion
Supplying parts for nearly all aircraft currently in service, TransDigm (NYSE: TDG) develops and manufactures components and systems for military and commercial aviation.
Why Is TDG a Top Pick?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.5% over the past two years
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 33.8% annually, topping its revenue gains
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
At $1,238 per share, TransDigm trades at 28.6x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Insulet (PODD)
Market Cap: $10.68 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 Are We Backing PODD?
- 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 jumped by 25.8 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
- Returns on capital are climbing as management makes more lucrative bets
Insulet’s stock price of $157.22 implies a valuation ratio of 24.1x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
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.
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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.
