In this article, we will look at the 7 Best Compounder Stocks to Buy Now.
Compounder stocks are getting more attention as investors look for companies that can keep expanding earnings without relying only on valuation gains. For this list, the focus is on companies with double-digit 5-year compounded annual earnings growth, double-digit expected annual earnings growth over the next 5 years, and return on equity above 15%. This screen points to businesses where growth, profitability, and capital efficiency are all working together.
Morgan Stanley Investment Management defines compounders as companies with “high quality, franchise businesses,” ideally built on “recurring revenues.” Janus Henderson makes the earnings side of the case, saying investors should “prioritize earnings growth” and look for companies with “earnings visibility” capable of delivering “quality earnings growth.” MFS adds that the long-term case for quality rests on “disciplined capital allocation, resilient earnings power, and balance sheet strength,” while noting that “Profitability is necessary but not sufficient.” In summary, compounders are not just fast growers. They are companies that can keep reinvesting at attractive rates while protecting margins and returns on capital.
Against this backdrop, compounder stocks deserve a closer look. With that in mind, let’s take a look at the 7 Best Compounder Stocks to Buy Now.
Our Methodology
We used the Finviz screener to identify stocks with double-digit 5-year compounded annual earnings growth, double-digit expected annual earnings growth over the next 5 years, and return on equity above 15%. We then limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
7. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
On June 4, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) CEO C.C. Wei said global chip supply is expected to remain constrained relative to AI-driven demand for years, Bloomberg’s Debby Wu reported. Wei said that even with expanded U.S. manufacturing capacity, TSMC will not be able to fully meet strong customer demand. Wei also reiterated a forecast for sales growth of more than 30% this year and said TSMC staff will receive more than a 30% increase in average bonus payouts this year.
On June 1, 2026, Nvidia (NVDA) announced that Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is using Nvidia accelerated computing and AI to advance semiconductor design and manufacturing. NVIDIA said TSMC is applying its technologies across the semiconductor design and manufacturing lifecycle to improve turnaround time, energy efficiency, yield, and operational productivity in advanced fabs.
Last month, Sony Semiconductor Solutions Corporation and Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) signed a non-binding memorandum of understanding to form a strategic partnership for next-generation image sensors. Under the proposed partnership, Sony and TSMC intend to establish a joint venture, with Sony as the majority and controlling shareholder, to set up development and production lines in Sony’s newly constructed fab in Koshi City, Kumamoto Prefecture. The companies said the partnership will combine Sony’s sensor design expertise with TSMC’s process technology and manufacturing strengths, while also exploring opportunities in physical AI applications such as automotive and robotics.
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) manufactures, packages, tests, and sells integrated circuits and other semiconductor devices internationally.
6. Visa Inc. (NYSE:V)
On June 3, 2026, Visa Inc. (NYSE:V) announced a collaboration with Brale to explore stablecoin-based settlement using SBC on the Canton Network. The proof of concept will evaluate how privacy-enabled blockchain infrastructure can support faster, programmable settlement while helping financial institutions and payment companies control the visibility of sensitive settlement transaction data.
On May 29, 2026, Replit announced a partnership with Visa Inc. (NYSE:V), with Visa making an investment in the agentic software creation platform. The companies are working to integrate Visa Intelligent Commerce into Replit’s platform, including payment building blocks within agent-building workflows. Visa and Replit are also exploring how agents built on Replit can join Visa’s Trusted Agent Protocol registry. On May 27, Visa expanded the Visa Commercial Solutions Hub through a new integration with Visa Accounts Receivable Manager, giving eligible issuers built-in access to end-to-end processing intended to “reduce operational friction and accelerate commercial card growth.”
Earlier in May, Truist analyst Matthew Coad raised the firm’s price target on Visa Inc. (NYSE:V) to $371 from $361 and maintained a Buy rating on the shares. Coad raised top-line estimates to reflect stronger expectations for Data Processing and Other Revenue, citing better pricing, demand for marketing-related value-added services ahead of the FIFA World Cup, and the inorganic contribution from Prisma/Newpay.
Visa Inc. (NYSE:V) operates as a payment technology company in the United States and internationally.
While we acknowledge the potential of V to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than V and that has 100x upside potential, check out our report about the cheapest AI stock.
Click to continue reading and see the 5 Best Compounder Stocks to Buy Now.
Disclosure: None. Follow Insider Monkey on Google News.
