These 'steady compounders' have delivered superior earnings growth for the past decade, Bank of America says

Bank of America highlights "Global Steady Compounders," stocks with consistent and superior earnings growth over the past decade, noting their historical 5.2% annualized outperformance against the MSCI AC World Index since 1998, though they may underperform during periods of rising bond yields with inflation or significant risk-on sentiment. The firm's screen, based on stable and forecasted earnings growth, highlighted Visa, Microsoft, and Intuit as top U.S. picks, all scoring 100; Visa and Microsoft have significantly outpaced the S&P 500 in 2025 and face upcoming earnings reports with strong analyst consensus.

Analysis

A Bank of America research note identifies a strategy focused on "Global Steady Compounders," companies with a decade of consistent and superior earnings growth, which have historically outperformed the MSCI AC World Index by an annualized 5.2% since 1998. The screening criteria prioritize a high score (above 95/100) based on 10-year earnings growth, stability, forward EPS forecasts, and earnings revisions. Top-scoring U.S. companies include Visa (V), Microsoft (MSFT), and Intuit (INTU), all achieving a perfect score of 100. This thesis is supported by their recent market outperformance in 2025, with Microsoft gaining over 21%, Intuit over 27%, and Visa nearly 12%, all surpassing the S&P 500's approximate 8% gain. Analyst sentiment is overwhelmingly positive for these names; 32 of 40 analysts rate Visa a buy or strong buy, and 56 of 62 hold similar ratings for Microsoft. Both companies face imminent earnings reports where analysts expect double-digit growth for Visa and around 14% growth for Microsoft. However, the strategy is not without risks; the report cautions that these stocks tend to underperform when bond yields rise with inflation and during significant risk-on market phases due to their defensive, stability-oriented nature.

Key Decisions for Investors

• Investors should consider adding exposure to high-quality compounders like Visa, Microsoft, and Intuit, which have demonstrated superior long-term earnings growth and significant recent stock performance.
• Pay close attention to the imminent earnings releases for Visa and Microsoft, as strong consensus expectations for double-digit growth create a high bar for the companies to meet or exceed.
• Monitor macroeconomic indicators, specifically rising bond yields and inflation, as the report explicitly identifies these as conditions under which this strategy historically underperforms.
• Given the substantial year-to-date gains of over 20% for stocks like Microsoft and Intuit, it is prudent to assess valuation and entry points, as strong future performance may already be partially priced in.