When it comes to identifying stocks that can deliver reliable, long-term growth, the concept of “steady compounders” stands out as a beacon for savvy investors. Bank of America’s recent analysis highlights a select group of companies that have demonstrated consistent and superior earnings growth over the past decade—companies that have outperformed the MSCI AC World Index by an annualized 5.2% since 1998. This insight isn’t just a data point; it’s a powerful signal for investors seeking durable growth in an unpredictable market.
Why Steady Compounders Matter More Than Ever
These steady compounders are not your typical high-flyers chasing short-term gains. Instead, they embody stability and resilience, showing consistent earnings growth, positive earnings revisions, and strong forward-looking earnings forecasts. Nigel Tupper, BofA’s strategist, points out that these stocks tend to outperform over extended periods, making them invaluable for portfolios focused on sustainable growth.
However, it’s crucial to understand the market contexts in which these stocks may underperform. Historically, steady compounders lag when bond yields rise alongside inflation or during significant risk-on rallies. This makes intuitive sense: investors often rotate into more speculative or cyclical stocks when the economic outlook brightens or when inflation pressures push bond yields higher. For example, during the inflation surge of 2022, many steady compounders took a back seat as investors favored value and cyclical sectors.
The Current Landscape: Earnings Season and Market Momentum
The ongoing earnings season underscores the strength of these companies. Nearly 82% of S&P 500 firms have beaten earnings expectations so far, according to FactSet, fueling market optimism and pushing indices to new highs. This environment favors steady compounders, which are often leaders in their sectors and benefit from robust earnings momentum.
Among the U.S. steady compounders, three names particularly stand out:
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Visa (V): Scoring a perfect 100 in BofA’s steady compounders ranking, Visa has outperformed the S&P 500 in 2025 with a nearly 12% gain versus the index’s 8%. Visa’s strong positioning in global payments, coupled with expected double-digit earnings and revenue growth for its fiscal Q3, cements its role as a growth stalwart. With 32 out of 40 analysts rating it a buy or strong buy, Visa is a prime example of a steady compounder thriving in the digital economy.
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Microsoft (MSFT): Also scoring 100, Microsoft has surged over 21% in 2025, driven by cloud computing and AI-related business growth. Analysts forecast a 14% year-over-year earnings and revenue increase. With 56 out of 62 analysts giving it a buy or strong buy rating, Microsoft remains a cornerstone for investors betting on tech innovation and enterprise software dominance.
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Intuit (INTU): Another perfect scorer, Intuit has soared more than 27% this year and 35% over the past six months. Its leadership in financial technology and tax software positions it well for continued growth, with earnings results due later this month.
What This Means for Investors and Advisors
The takeaway here is clear: steady compounders offer a blend of growth and reliability that can anchor portfolios, especially in volatile or uncertain markets. Yet, investors must remain vigilant about macroeconomic shifts—rising bond yields or inflation spikes can temporarily pressure these stocks.
Actionable Insights:
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Diversify with Steady Compounders: Advisors should consider increasing exposure to steady compounders within growth allocations. These companies often provide a buffer against market volatility due to their consistent earnings profiles.
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Monitor Interest Rate Trends: Given that steady compounders underperform when bond yields rise, investors should track Federal Reserve signals closely. A rising rate environment might warrant a tactical shift toward sectors less sensitive to rates.
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Leverage Earnings Momentum: Use earnings seasons as buying opportunities. Companies like Visa, Microsoft, and Intuit often rally on strong earnings beats, offering entry points for investors seeking growth with lower risk.
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Stay Ahead of Innovation: Many steady compounders, particularly in tech and fintech, are at the forefront of innovation (e.g., AI integration, digital payments). Investors should watch for companies that not only grow steadily but also lead transformative trends.
Looking Ahead:
As we move further into 2025, the interplay between inflation dynamics, monetary policy, and technological innovation will shape market leadership. Steady compounders with strong earnings momentum and innovation pipelines are likely to remain key players. However, investors should prepare for potential volatility as bond yields fluctuate.
According to a recent report by Morningstar, portfolios with a balanced mix of steady compounders and cyclical growth stocks have historically delivered superior risk-adjusted returns, especially during periods of economic transition. This reinforces the need for a nuanced approach—embracing steady compounders for stability while selectively adding growth-oriented cyclical stocks to capture upside during risk-on phases.
Final Thought:
For investors and advisors aiming to build resilient, growth-oriented portfolios, the steady compounders spotlighted by Bank of America offer a compelling roadmap. By combining rigorous earnings consistency with strategic sector leadership, these companies can be the cornerstone of long-term wealth creation. Keep a close eye on their earnings reports, analyst sentiment, and macroeconomic signals to navigate the evolving market landscape with confidence.
If you’re looking to stay ahead of the curve, now is the time to reassess your portfolio’s exposure to steady compounders—because in a world of uncertainty, consistency is a rare and valuable asset.
Source: ‘Steady compounder’ stocks that have delivered solid earnings growth: BofA