Compounders at a
Fair Price.
A compounder at a fair price is a company that grows its profit without swallowing capital, whose profit turns into real cash, that hands cash back to its owners, and whose price has not already paid for all of that. This page runs every stock we track through those four tests and shows who clears all four, who clears three, and which one the rest miss.
Reading the filings…
The four lenses, exactly
| Lens | Cleared when | The full list |
|---|---|---|
| Capital-light growth | Operating profit at least doubled over 10 years, the business earns 25% or more before tax on the capital it uses (or ties none up), and each extra $1 of profit needed no more than about $3.30 of new capital: FlightSafety or better in Buffett's 2007 letter | Capital-Light Compounders |
| Profit is real | No red flag in the five earnings-quality checks (Beneish M-score, accruals, cash conversion, stock comp, dilution). A "watch" item is allowed | Earnings Quality Screener |
| Cash to owners | Dividends plus buybacks minus stock comp come to at least 1% of market cap a year, averaged over the last three fiscal years | Shareholder Yield Leaders |
| Fair price | PEG at or under the bar you pick: 1 (Lynch's fair value), 1.5 (the bar of this site's own 8-filter screen) or 2 | PEG Ratio Ranking |
- No score. Each lens is cleared or it is not, and the page counts how many a stock clears. A count is not a rating: a stock that clears three because it misses the price test is a different story from one that misses on real profit.
- A lens that cannot be measured is never counted as cleared or as failed. A bank has no capital-light figure, a loss-maker has no PEG; those cells say n/a.
- The thresholds are this page's own choices, anchored where they can be: Buffett's FlightSafety for capital, Lynch's PEG of 1 for price. Change the PEG bar and the list changes at once.
What this can't do
- It looks backward. Ten years of profit and three of cash say what a company has done, not what it will do. A PEG is only as good as the growth rate behind it.
- It cannot see what is not on the balance sheet: research, brands and content spending are never counted as capital, and cyclical companies look best measured from a trough. The capital lens says so on those rows.
- Large US stocks only, survivors only. It covers the companies we track today, not the ones that grew and then failed.
- A short list is a starting point, not a recommendation. Read the company's own filings, and its price against its value, before acting.
On Oct 23, 2026, 13 of the 503 tracked stocks clear all four lenses: capital-light growth, profit that is real, cash returned to owners and a PEG of 1.5 or under. 23 more clear the three business lenses but are priced above that PEG, and only 316 can be measured on all four. Fair Isaac (FICO) ranks first, clearing 4 of 4.
Who Clears
All Four?
By default: stocks that clear every lens at a PEG of 1.5 or under, cheapest growth first. Switch to the near misses, or loosen or tighten the price bar. Click any row for the full stock card.
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Why These
Four Lenses.
Each lens screens out a different way a growing company can disappoint. Together they leave a short list, because a business that grows on little capital is often already priced for it.
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Each bar keeps only the stocks that cleared every lens above it. The last step is the one you control: pick a looser or tighter PEG bar above the list and watch it move.
Grows without swallowing capital
A business that needs little new capital to grow can send its profit to its owners. Buffett's See's Candies turned $32M of new capital into $77M more annual profit; a typical grower needs about $400M for the same gain.
Profit that turns into cash
Growth that is mostly accounting, with receivables piling up or profit running ahead of cash, does not compound. The earnings-quality checks look for exactly that, in the company's own filings.
See Earnings Quality.
Cash that comes back
Compounding only helps you if the cash a company does not need reaches you, or is reinvested well. Net shareholder yield counts dividends and buybacks and takes off the stock handed to employees.
See Shareholder Yield.
A price that leaves room
Even a great business is a poor purchase at a price that already counts all its growth. PEG compares the P/E you pay with the growth you get: Peter Lynch's fair value is a PEG of 1.
See PEG Ratio Ranking.
Which stocks are great businesses at a fair price?
On Oct 23, 2026, 13 of the 503 tracked stocks clear all four lenses: capital-light growth, profit that is real, cash returned to owners and a PEG of 1.5 or under. 23 more clear the three business lenses but are priced above that PEG, and only 316 can be measured on all four. Fair Isaac (FICO) ranks first, clearing 4 of 4.
| Stock | Lenses cleared | Capital per $1 of new profit | Net shareholder yield | PEG | Misses |
|---|---|---|---|---|---|
| FICOFair Isaac Corp | 4 of 4 | $0.06 | 4.2% | 0.65 | none |
| ITGartner Inc | 4 of 4 | none needed | 6.9% | 0.68 | none |
| CMGChipotle Mexican Grill Inc | 4 of 4 | $0.51 | 3.4% | 0.71 | none |
| LIILennox International Inc | 4 of 4 | $2.25 | 2.4% | 0.83 | none |
| ADBEAdobe Inc | 4 of 4 | $0.55 | 6.6% | 0.91 | none |
| EXPEExpedia Group Inc | 4 of 4 | none needed | 4.5% | 0.94 | none |
| TMUST-Mobile US Inc | 4 of 4 | $2.87 | 7.9% | 0.98 | none |
| INCYIncyte Corp | 4 of 4 | $0.56 | 1.8% | 1.09 | none |
| NFLXNetflix Inc | 4 of 4 | $1.98 | 2.5% | 1.10 | none |
| AMATApplied Materials Inc | 4 of 4 | $1.28 | 1.3% | 1.20 | none |
Clearing all four is a screen, not a recommendation: it asks whether a business grew profit on little capital, whether that profit is backed by cash, whether it pays owners, and whether the price is fair for its growth. See capital-light and the See's Candies test for the first lens.
Capital, cash returns and earnings quality from each company's 10-K filings on SEC EDGAR; P/E and PEG from the weekly screener run. Educational content only, not investment advice.
Frequently asked questions
What is a compounder at a fair price?
A business that grew profit on little new capital, whose profit is backed by cash, that pays cash back to its owners, and whose price is reasonable for its growth. This page tests each tracked stock on those four lenses and lists how many it clears.
What are the four lenses and their thresholds?
Capital-light growth: operating profit at least doubled over ten years with a return on capital of 25% or more and no more than about $3.33 of capital per $1 of new profit. Real profit: no earnings-quality flag. Cash to owners: a net shareholder yield of 1% a year or more. Fair price: a PEG of 1.5 or under.
Why do so few stocks clear all four?
Each lens removes a share of the stocks and they overlap little, so the list shrinks at every step. The funnel on the page shows how many remain after each lens, which is also the quickest way to see which one is the hardest to pass.
What does great business, price too high mean?
The stock clears the three business lenses (capital-light growth, real profit, cash to owners) but its PEG is above the limit. It is a business to understand now and revisit if the price or the growth changes.
Which stocks cannot be measured?
Banks, insurers, REITs and lenders, because their capital and cash flow are not comparable, and companies without enough filings or with falling or negative earnings. They show n/a on the lens they cannot be measured on instead of a failing mark.
About this compounders screen
A compounder is a company that keeps growing its profit year after year. This compounder screen looks for the ones still available at a fair price: capital-light growth, real earnings, cash returned to shareholders and a reasonable PEG ratio, all computed from each company's 10-K filings and weekly market data. Use it as a shortlist to research, next to the stock screener and the intrinsic value calculator. The four lenses are defined on the capital-light method page.
Educational content only, not investment advice. Clearing four lenses means a stock passed four mechanical tests on past data, not that it will keep growing or that its price is a bargain. Check the company's own filings and the Margin of Safety Explorer before acting.