Momentum Quality Compounders
Pure momentum strategies often work — until they don't. The crashes are violent, and the worst losses come from chasing low-quality stocks that moved up on sentiment rather than fundamentals.
This screen layers a high quality bar on top of momentum: only stocks in the top quartile by 3-month total return AND with a Tessera Rating above 75 surface here. The thesis is that compounders moving up tend to keep moving up — both the business and the market are working in the same direction. Read the regime-aware investing methodology to understand when momentum screens work and when they don't.
Criteria
- 3-month price momentum: Top quartile of trailing 3-month total return across the universe
- Quality score: Tessera Rating ≥ 75 / 100 (high bar)
- Profitability: Positive ROIC, free cash flow, and operating margin
- Universe: US-listed equities, market cap above $2B
Underlying methodology
See the current top 10 stocks for this screen
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Sign up freeFrequently asked questions
Isn't momentum just chasing winners?
Pure momentum strategies can be — but combining momentum with a high quality bar avoids the worst of that. The quality filter excludes meme stocks and speculative names that move on sentiment alone, leaving compounders that are moving up because their fundamentals are also moving up.
When does this screen underperform?
Sharp market reversals, regime shifts, and momentum crashes (e.g., 2022's growth-to-value rotation) hurt momentum-based screens. The screen is most effective in trending bull or steady neutral regimes. Pair with the regime-detection methodology.
Why 'compounders' specifically?
The framing avoids meme-stock and growth-at-any-price connotations. A compounder is a business that consistently grows intrinsic value over years — high ROIC, expanding margins, strong reinvestment. Combining compounder fundamentals with momentum surfaces names where both the business and the market are working in the same direction.