Compounding Quality

Compounding Quality

Share this post

Compounding Quality
Compounding Quality
Update Buy-Hold-Sell List: May 2025
Copy link
Facebook
Email
Notes
More

Update Buy-Hold-Sell List: May 2025

Compounding Quality's avatar
Compounding Quality
May 29, 2025
∙ Paid
61

Share this post

Compounding Quality
Compounding Quality
Update Buy-Hold-Sell List: May 2025
Copy link
Facebook
Email
Notes
More
1
Share

The market recovered from the Trump Tariffs.

But some Quality Stocks are still beaten down.

Let’s update our Buy-Hold-Sell List. Which stocks look attractive right now?

Understanding analyst stock ratings | Charles Schwab

I run at least 20 miles (32 kilometers) every week.

You know why? It’s a win-win for me.

On the one hand, I’m staying in shape.

On the other hand, it’s my classroom on the move. I always listen to podcasts while working out. My best investment ideas always pop up when I’m running.

Right now, I’m building up for a marathon in a couple of months.

Some great investment lessons can be found in running a marathon:

  • Slow and steady wins the race. Investing is a marathon, not a sprint

  • Rest days are essential for runners, and so is downtime for investors. Sometimes the best move is not making one

  • You know how to run a marathon? One step at a time. A 1% improvement seems small until it compounds

  • One bad run or market crash doesn’t define the journey. Setbacks are normal

Running is becoming more and more popular.

Some companies are benefiting from this.

An example? Deckers Outdoor Corporation ($DECK).

They bought HOKA, a running shoe brand, in 2012 for $1.1 million. In 2023, HOKA generated over $1.4 billion in revenue!

This month, we added Deckers Outdoor to the Buy-Hold-Sell list.

The stock is down 50% (!) YTD and currently trades at a Forward PE of 16.5x.

Source: Quartr

Buy-Hold-Sell List

The Buy-Hold-Sell List is a list of quality companies. We wrote a few articles about it in the past:

  • Introduction Buy-Hold-Sell List September 2024

  • Update Buy-Hold-Sell List: October 2024

  • Update Buy-Hold-Sell List: November 2024

  • Update Buy-Hold-Sell List: March 2025

  • Update Buy-Hold-Sell List: April 2025

We look for cheap Quality Stocks based on three valuation methods:

  1. Comparing the Forward PE multiple to its historical average

  2. Earnings Growth Model

  3. Reverse Discounted-Cash Flow

Based on this, we give each company a Buy, Hold, or Sell recommendation.

Update May 2025

Since last time, we only added one company to the Buy-Hold-Sell list: Deckers Outdoor.

How does the company make money?
Deckers Outdoor Corporation makes popular footwear brands like UGG, HOKA, and Teva. It grows by creating strong brand loyalty and selling high-margin shoes that are both stylish and functional.

Deckers receives a ‘Buy’-recommendation.

I removed two companies from the Buy-Hold-Sell List:

  • Discover Financial Services ($DFS): Capital One Financial Corporation acquired the company on May 19, 2025

  • Zynex ($ZYXI): The company doesn’t meet our quality criteria anymore

Furthermore, we have updated the recommendations for some companies since last time.

Seven companies went from Buy to Hold due to increasing stock prices:

  • Arista Networks ($ANET): Makes network switches used in big data centers

  • Carlisle Companies ($CSL): Sells roofing and insulation for buildings

  • Equasens ($EQS): Makes software for pharmacies and healthcare providers

  • Hamilton Lane ($HLNE): Helps big investors manage private market investments

  • Howden Joinery ($HWDN): Sells kitchens and joinery products to builders

  • Marimekko ($MEKKO): A Finnish brand known for bold prints

  • Moncler ($MONC): An Italian company that sells luxury winter jackets and fashion

You can download the entire list here:

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 Compounding Quality
Publisher Privacy
Substack
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share

Copy link
Facebook
Email
Notes
More