🏆 15 Quality stocks you should know

Always invest in compounding machines

Looking for investment inspiration?

Here are a few great criteria to screen for quality companies:

In this article we share 15 Quality stocks which match these criteria.

Company 1: Apple ($AAPL)

Apple is the largest company in the world which manufactures, and markets smartphones, personal computers and tablets. 18% of all new phones sold are iPhones.

• FCF Margin: 28.3%

• ROIC: 48.8%

• FCF Yield: 5.2%

• Expected yearly FCF Growth (next 3 years): 5.7%

• CAGR since IPO: 19.5%

Company 2: Microsoft ($MSFT)

Microsoft operates as a software company. Word, Excel, … are all applications of Microsoft. Microsoft is also active in cloud storage.

• FCF Margin: 32.3%

• ROIC: 28.1%

• FCF Yield: 3.8%

• Expected yearly FCF Growth (next 3 years): 12.3%

• CAGR since IPO: 22.7%

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Company 3: Monster Beverage ($MNST)

Monster Beverage markets and distributes energy drinks. Monster Beverage is the best performing stock within the S&P 500 since 2000.

• FCF margin: 20.1%

• ROIC: 18.5%

• FCF yield: 2.0%

• Expected FCF growth (next 3 years): 16.3%

• CAGR since IPO: 19.3%

Company 4: Alphabet ($GOOGL)

Everyone knows Google. The company 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: 26.0%

• ROIC: 23.9%

• FCF Yield: 5.3%

• Expected yearly FCF Growth (next 3 years): 10.2%

• CAGR since IPO: 22.7%

Company 5: Visa ($V)

Together with Mastercard, Visa dominates the market for digital payments. Electronic payments are in a strong secular trend, giving a tailwind to Visa.

• FCF margin: 61.0%

• ROIC: 24.5%

• FCF yield: 3.9%

• Expected FCF growth (next 3 years): 18.2%

• CAGR since IPO: 22.8%

Company 6: Evolution AB ($EVO)

Evolution AB operates as a gaming company. The Company develops, produces, markets and licenses fully integrated B2B live casino solutions to online casino operators.

• FCF Margin: 52.9%

• ROIC: 21.5%

• FCF Yield: 5.1%

• Expected yearly FCF Growth (next 3 years): 14.6%

• CAGR since IPO: 72.3%

Company 7: Nvidia ($NVDA)

Nvidia is known for developing integrated circuits, which are used in everything from electronic game consoles to personal computers (PCs). The company is a leading manufacturer of high-end graphics processing units (GPUs).

• FCF margin: 30.2%

• ROIC: 18.7%

• FCF yield: 2.2%

• Expected FCF growth (next 3 years): 25.2%

• CAGR since IPO: 31.6%

Company 8: Accenture ($ACN)

Accenture is a consultancy company with management and technology consulting services and solutions.

• FCF Margin: 14.3%

• ROCE: 32.1%

• FCF Yield: 4.9%

• Expected yearly FCF Growth (3 yr): 7.6%

• CAGR since IPO: 16.4%

Company 9: Old Dominion Freight Line ($ODFL)

Old Dominion Freight Line is the fourth-largest less-than-truckload carrier in the United States. The company is by far one of the most disciplined and efficient providers in the trucking industry.

• FCF margin: 12.6%

• ROIC: 36.8%

• FCF yield: 2.7%

• Expected FCF growth (next 3 years): 2.8%

• CAGR since IPO: 19.8%

Company 10: Adobe ($ADBE)

Adobe is a true compounding machine active in computer software products and technologies. Adobe’s products allow users to express and use information across all print and electronic media.

• FCF margin: 42.1%

• ROIC: 26.4%

• FCF yield: 4.6%

• Expected FCF growth (next 3 years): 24.3%

• CAGR since IPO: 17.6%

Company 11: Synopsys ($SNPS)

Synopsys is a provider of electronic design automation software, intellectual property, and software integrity products. EDA software automates the chip design process, enhancing design accuracy, productivity, and complexity in a full-flow end-to-end solution.

• FCF margin: 31.5%

• ROIC: 16.7%

• FCF yield: 2.9%

• Expected FCF growth (next 3 years): 24.0%

• CAGR since IPO: 12.8%

Company 12: InMode ($INMD)

InMode develops medical devices, manufacturing platforms that harness novel radio-frequency based technology.

• FCF Margin: 48.7%

• ROIC: 39.3%

• FCF yield: 7.2%

• Expected FCF Growth next 3 years: 7.2%

• CAGR since IPO: 64.3%

Company 13: O’Reilly Automotive ($ORLY)

O’Reilly Automotive is one of the largest sellers of aftermarket automotive parts, tools, and accessories, serving professional and DIY customers. The company sells branded as well as own-label products

• FCF Margin: 20.7%

• ROIC: 40.3%

• FCF yield: 3.6%

• Expected FCF Growth next 3 years: 7.6%

• CAGR since IPO: 21.6%

Company 14: Novo Nordisk ($NOVO-B)

Novo Nordisk is active in diabetes treatment. More and more people will suffer from diabetes due to our aging population and obesity.

• FCF Margin: 34.6%

• ROIC: 62.0%

• FCF yield: 2.7%

• Expected FCF Growth next 3 years: 14.4%

• CAGR since IPO: 19.9%

Company 15: Mastercard ($MA)

Just like Visa, Mastercard is a beautiful company. Mastercard has a huge competitive advantage, high profit margins and a healthy balance sheet.

• FCF margin: 48.0%

• ROIC: 49.3%

• FCF yield: 2.7%

• Expected FCF growth (next 3 years): 12.8%

• CAGR since IPO: 31.0%

Still looking for more?

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Here are a few other examples of Compounding Quality stocks:

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About the author

Compounding Quality is a professional investor which manages a worldwide equity fund with more than $150 million in Assets Under Management. We have read over 500 investment books and spend more than 50 hours per week researching stocks.

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