Where Tomorrow’s Winners Emerge

Finding Forever Stocks With The Emerging Lindy Screen

Each week, here at Porter & Co., we apply our brainpower to uncover the most compelling, highest-upside investment ideas. And with this complimentary issue of the Daily Journal, we draw back the curtain to show you how we do it.

A key instrument in our analytical toolbox is our stock screens, in which we apply a list of criteria – relating to different financial, accounting, and performance parameters – to sift through the 14,000+ publicly traded stocks on U.S. markets. That’s how we are able to identify the tiny fraction of the universe of U.S.-listed stocks that offer the best opportunities for making money.

We often use the results from these screens as a starting point for more in-depth analysis for possible inclusion in the Complete Investor portfolio (although not today).

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Finding enduring, forever-compounding businesses is difficult enough on its own. But this week, we’re taking it a step further – identifying the Emerging Lindys before they become household names, while they’re still misunderstood, contrarian, or dismissed as failures.

These are the companies that could define new industries for decades, compounding capital far beyond the market’s time horizon. They’re built on structural innovation, vertical integration, and cultural durability – qualities that make them enduring in a world of fragility.

Emerging Lindys are companies transitioning from zero to one. As Peter Thiel describes, going from zero to one means creating something truly new – not improving on what already exists or competing at the margin.

While most progress is horizontal, zero-to-one progress is vertical – pure invention. It’s the leap that brings something into existence where nothing existed before. Facebook (META) didn’t just connect friends – it rewired how billions share identity. Netflix (NFLX) turned Friday-night rentals into a frictionless global habit, collapsing Hollywood into the cloud. Nvidia (NVDA) transformed the humble graphics chip into the engine of the AI revolution. Uber Technologies (UBER) didn’t improve the taxi – it reimagined urban mobility as a digital network.

The Emerging Lindy Screen blends qualitative insight with quantitative rigor, filtering for firms that exhibit both structural innovation and financial traction – early signals of future Lindy compounding.

• Zero-to-One DNA: Category creation and technological differentiation

• Forever TAM: Reaching the total addressable market for durable human needs – computing, health, money, safety

• Founder-Led Mission: Long-term focus and meaningful insider ownership

• Financial Traction: Sustained >25% revenue growth, expanding gross margins, high retention, and visible free cash flow growth

• Path to Leverage: Operating expense as a percentage of revenue is declining, ROIC is rising steadily

• Resilience: The ability to emerge stronger from cycles or shocks

Here are the financial metrics we’ve used to produce today’s screen:

1. Sustained high growth

• Revenue CAGR (five year) ≥ 25%

2. Quality business with pricing power

• Average gross margin (three year) ≥ 50% or

• Average EBITDA margin (three year) ≥ 50% or

• Average EBITDA margin growth ≥ 30%

3. Efficiency improvement

• Operating margin growth (three year) ≥ 15%

4. Capital efficiency leading to compounding returns

• ROIC growth (three year) ≥ 15% or

• ROIC average (three year) ≥ 15%

5. Self-funding growth, demonstrating positive unit economics

• Positive FCF growth in at least three of last four years

6. Remove balance-sheet outliers

• Net debt / EBITDA ≤ 6

7. Alignment and continuity (founder/operator)

• More than five insiders own shares

For many Emerging Lindys or early-stage compounders, leverage isn’t a reach for survival but a strategic investment in the future. These companies often take on debt to fund infrastructure, content, or capacity ahead of cash flow maturity. Amazon and Axon both carried high levels of debt during their early expansion phases, when EBITDA lagged growth. When reinvested capital earns outsized returns, temporary leverage becomes a bridge to compounding – which is why we’ve used a higher net-debt-to-EBITDA ratio.

Today’s screen featured 30 companies. You’ll see that some existing Lindy businesses made it through the screen, as testament to their enduring power and success:

Highs And Lows

Each week, we also monitor any stocks in the market making a 52-week high. We do this because any stock on its way to generating 2x, 3x, or 10x returns will spend a lot of time making 52-week highs along the way. Thus, the 52-week-high list provides an opportunity to flag these potential high performers before they really break out, with a particular emphasis on lower-profile, less widely-followed stocks that might have otherwise gone unnoticed.

Notable stocks making a 52-week high this week:

• Analog Devices (ADI)

• Advanced Energy Industries (AEIS)

• Applied Industrial Technologies (AIT)

• Applied Materials (AMAT)

• AMETEK (AME)

• Amkor Technology (AMKR)

• ASML (ASML)

• AstraZeneca (AZN)

• Boeing (BA)

• Credicorp (BAP)

• Franklin Resources (BEN)

• Bank of New York Mellon (BK)

• Baker Hughes (BKR)

• TopBuild (BLD)

• BWX Technologies (BWXT)

• Cardinal Health (CAH)

• Caterpillar (CAT)

• Cboe Global Markets (CBOE)

• C.H. Robinson Worldwide (CHWR)

• Clean Harbors (CLH)

• Cummins (CMI)

• Coherent (COHR)

• Curtiss-Wright (CW)

• Donaldson (DCI)

• Dollar Tree (DLTR)

• Dycom Industries (DY)

• Emerson Electric (EMR)

• Entegris (ENTG)

• Evercore (EVR)

• Taiwan Semiconductor (TSM)

• Micron Technology (MU)

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We also monitor stocks on the 52-week-low list. In many cases, the names on this list are there for good reason – the market is often correctly pricing in weak fundamentals. However, once in a while, a great business with excellent long-term prospects finds itself on this list due to a temporary setback. This can create the rare opportunity to buy top-shelf merchandise at bargain-basement prices.

Notable stocks making a 52-week low last week:

• Adobe (ABDE)

• DocuSign (DS)

• Duolingo (DUOL)

• Figma (FIG)

• GoDaddy (GDDY)

• Guidewire (GWRE)

• Kimberly-Clark (KMB)

• HubSpot (HUBS)

• Lucid (LCID)

• ServiceNow (NOW)

• Roper Technologies (ROP)

• Atlassian (TEAM)

• Wix.com (WIX)

Porter & Co Stevenson, Maryland