Compounding Quality
Compounding Quality

@QCompounding

20 Tweets 13 reads Jul 10, 2023
Quality matters.
This list returned more than 15% per year over the past 10 years.
Here are 15 Quality Stocks you should know:
1. Visa ($V)
Visa is a great quality business with a wide moat and incredible profit margins. The secular trends toward electronic payments gives Visa a lot of tailwinds.
- FCF Margin: 61.0%
- ROIC: 28.2%
- FCF Yield: 3.8%
- Exp. FCF Growth (3 yr): 15.6%
- CAGR since IPO: 23.0%
2. Moody's ($MCO)
S&P Global, Moody’s and Fitch dominate the credit rating market. They were the market leaders in 1980 and probably will still be in 30 years from now.
- FCF Margin: 21.8%
- ROIC: 15.0%
- FCF Yield: 2.4%
- Exp. FCF Growth (3 yr): 18.0%
- CAGR since IPO: 15.7%
3. Adobe ($ADBE)
Adobe is active in computer software products and technologies. Adobe’s products allow users to use information across all print and electronic media.
- FCF Margin: 42.0%
- ROIC: 25.7%
- FCF Yield: 3.4%
- Exp. FCF Growth (3 yr): 23.2%
- CAGR since IPO: 19.0%
4. Alphabet ($GOOGL)
Google has a (quasi-)monopoly in digital advertisements. Charlie Munger once stated that Alphabet has one of the widest moats he has ever seen.
- FCF Margin: 21.2%
- ROIC: 20.9%
- FCF Yield: 4.3%
- Exp. FCF Growth (3 yr): 19.0%
- CAGR since IPO: 23.8%
5. Microsoft ($MSFT)
Everyone knows Microsoft. Microsoft has a very wide moat in software applications, cloud storage, and advanced security solutions.
- FCF Margin: 32.9%
- ROIC: 26.2%
- FCF Yield: 2.4%
- Exp. FCF Growth (3 yr): 10.5%
- CAGR since IPO: 23.7%
6. Amazon ($AMZN)
Amazon is a leading online retailer and one of the greatest e-commerce companies in the world.
- FCF Margin: -3.3%
- ROIC: 4.2%
- FCF Yield: 1.3%
- Exp. FCF Growth (3 yr): /
- CAGR since IPO: 33.0%
7. Equifax ($EFX)
Equifax ($EFX) Equifax is a consumer credit reporting agency active in information management, transaction processing and direct marketing.
- FCF Margin: 2.6%
- ROIC: 7.2%
- FCF Yield: 2.7%
- Exp. FCF Growth (3 yr): 25.1%
- CAGR since IPO: 13.7%
8. Zoetis ($ZTS)
Zoetis produces animal health medicines and vaccines. More and more people are treating their pets as full family members, and Zoetis benefits from this.
- FCF Margin: 16.4%
- ROIC: 19.2%
- FCF Yield: 2.2%
- Exp. FCF Growth (3 yr): 11.6%
- CAGR since IPO: 20.7%
9. Intuit ($INTU)
Intuit is a provider of small-business accounting software, personal tax solutions, and professional tax offerings.
- FCF Margin: 28.8%
- ROIC: 9.3%
- FCF Yield: 3.3%
- Exp. FCF Growth (3 yr): 32.4%
- CAGR since IPO: 19.0%
10. Verisk ($VRSK)
Verisk is a data analytics provider offering decision support and risk-management solutions to the financial industry.
- FCF Margin: 31.4%
- ROIC: 17.2%
- FCF Yield: 2.6%
- Exp. FCF Growth (3 yr): 12.5%
- CAGR since IPO: 18.7%
11. Mastercard ($MA)
Mastercard provides financial transaction processing services for credit and debit cards. Together with Visa, they dominate this attractive market.
- FCF Margin: 48.4%
- ROIC: 47.8%
- FCF Yield: 2.9%
- Exp. FCF Growth (3 yr): 16.5%
- CAGR since IPO: 31.6%
12. S&P Global ($SPGI)
S&P Global provides clients with financial information services (credit ratings, benchmarks, ...) in the capital and commodity markets.
- FCF Margin: 22.5%
- ROIC: 6.1%
- FCF Yield: 3.3%
- Exp. FCF Growth (3 yr): 15.5%
- CAGR since IPO: 14.2%
13. EstΓ©e Lauder ($EL)
$EL is the world leader in the global prestige beauty market. The company manufactures skin care, makeup, fragrance, and hair care products.
- FCF Margin: 11.3%
- ROIC: 7.4%
- FCF Yield: 1.5%
- Exp. FCF Growth (3 yr): 21.9%
- CAGR since IPO: 13.1%
14. Verisign ($VRSN)
Verisign is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net top-level domains.
- FCF Margin: 56.4%
- ROIC: 176.2%vv
- FCF Yield: 3.6%
- Exp. FCF Growth (3 yr): 10.1%
- CAGR since IPO: 15.8%
15. Thermo Fisher ($TMO)
Thermo Fisher Scientific sells scientific instruments and laboratory equipment, diagnostics consumables, and life science reagents.
- FCF Margin: 15.4%
- ROIC: 8.5%
- FCF Yield: 3.4%
- Exp. FCF Growth (3 yr): 23.6%
- CAGR since IPO: 13.1%
Here's an overview of all companies mentioned:
That's it for today.
Looking for even more inspiration?
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Did you know that in the movie The Big Short, the real Michael Burry played a role?
The previous list returned more than 20% in less than 4 months.
It outperformed the S&P500 with more than 9%.

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