3 Quality Compounders on Our Buy List

Quality compounders are well-oiled machines. Their competitive advantages allow them to make profits consistently and reinvest them into projects that generate even more profits, creating a virtuous cycle of returns.

Quality compounders are well-oiled machines. Their competitive advantages allow them to make profits consistently and reinvest them into projects that generate even more profits, creating a virtuous cycle of returns. Companies with these characteristics are our definition of a "blue-chip".

Keeping that in mind, here are three quality compounders that could amplify your portfolio's returns. Sterling (STRL) Market Cap: $20.85 billion Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Why Is STRL a Good Business? - Market share has increased this cycle as its 19.8% annual revenue growth over the last two years was exceptional - Strong free cash flow margin of 15.6% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy - Returns on capital are growing as management capitalizes on its market opportunities Sterling is trading at $690.04 per share, or 33.3x forward P/E. Is now a good time to buy? Find out in our full research report, it's free.

Hubbell (HUBB) Market Cap: $25.57 billion A respected player in the electrical segment, Hubbell (NYSE:HUBB) manufactures electronic products for the construction, industrial, utility, and telecommunications markets. Why Will HUBB Beat the Market? - Solid 10.2% annual revenue growth over the last five years indicates its offerings solve complex business issues - Share buybacks catapulted its annual earnings per share growth to 19.7%, which outperformed its revenue gains over the last five years - Free cash flow margin increased by 7.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders Hubbell's stock price of $483.73 implies a valuation ratio of 23.1x forward P/E. Is now the time to initiate a position?

See for yourself in our full research report, it's free. Insulet (PODD) Market Cap: $11.02 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 Will PODD Outperform?

- 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 increased by 25.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders - Rising returns on capital show management is finding more attractive investment opportunities