Quality compounders
Businesses that have earned 15%+ on invested capital for five years while growing and staying lightly indebted.
A company that keeps reinvesting at high returns compounds its value; its share price tends to follow over long periods even if it never looks cheap. High gross margins point to pricing power, and modest debt means the compounding survives a bad year.
$10,000 in this list since 2016
Rebuilt every month from the data public at the time
- Per year
- +17.9%
- All stocks +9.4%, S&P 500 +13.8%
- Worst fall from a peak
- -34%
- All stocks -35%
- Months ahead of all stocks
- 57%
- 120 months tested
- Stocks held, on average
- 42
- Equal weights
- Past 12 months
- +9.2%
- All stocks +4.1%, S&P 500 +12.4%
- Volatility, per year
- 21%
- All stocks 22%
- Sharpe ratio
- 0.78
- All stocks 0.40; return over cash per unit of volatility
- Replaced each month
- 6%
- Share of the list that changes at a rebalance
Live since Oct 19, 2026. Holding the list as published, rebought at each month end: -0.3% against +2.1% for all stocks and +0.7% for the S&P 500, to Oct 30, 2026. Too short a period to read much into.
- Quality compounders
- All US stocks, equal weight
- S&P 500 (price only)
Year by year
| Portfolio | 2016from Oct 31 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026to Oct 19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| This list | +1% | +42% | -4% | +51% | +42% | +21% | -29% | +48% | +20% | +6% | +7% |
| All US stocks | +12% | +19% |
65 stocks on the list today
As of the close on Oct 30, 2026; 0 joined and 0 left since Oct 29, 2026
| # | Company | Share price | 1D | Market cap | ROIC 5Y | Gross margin | FCF margin | Rev. 5Y | Debt/equity | P/E |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | $248.39 | +3.1% | $14.5B | 6709% | 55.9% | 32.8% | 13.0% | 0.00 | 69.6× | |
| 2 |
More quality ideas
A list produced by rules, not a recommendation. Past results in the backtest don't predict future returns. How the backtests work.