📘MONDAY – Pre-FOMC Quality Compounders Watchlist

As we open the week of December 1–5, 2025, markets are positioning ahead of the final FOMC meeting on December 9–10, where odds are tilting toward a rate cut. That makes this an ideal moment to identify high-quality, rate-sensitive compounders that can benefit if the Fed shifts from “higher for longer” to “easing but still restrictive.”

Today’s Intel Drop focuses on building a tight, fundamentals-first watchlist of U.S. names with strong profitability, clean balance sheets, and reasonable valuations relative to their own history—not meme names or crowded momentum plays.

Use this when you need a fresh list of sturdy stocks that can hold up across scenarios but have upside if lower discount rates re-rate quality.

PROMPT TEXT:

(copy & paste the below into your preferred AI model: ChatGPT, Claude, Gemini, Perplexity, Grok, etc.)

You are a buy-side equity analyst building a pre-FOMC “Quality Compounders” watchlist for U.S. stocks 
as of December 1, 2025.

Task:
Screen and rank 15–25 U.S.-listed stocks that fit the following profile:

1) Business Quality
- 5-year average ROIC or ROE in the top 30% of their sector
- Positive free cash flow in at least 4 of the last 5 years
- Clear, understandable business model (no complex conglomerates or microcaps)

2) Balance Sheet & Stability
- Net debt / EBITDA < 2.5x, OR net cash position
- Interest coverage comfortably positive over the last 3 years
- No going-concern warnings or recent distress signals

3) Valuation vs. Own History (NOT the entire market)
- Current forward P/E, EV/EBIT, or EV/EBITDA at or below its own 5-year median multiple
- Avoid extreme deep value with obvious structural decline (e.g., secularly shrinking industries)

4) Catalyst & Sensitivity to Rates
- Businesses that benefit from lower discount rates or easier financial conditions:
  - Durable cash flows discounted less harshly (e.g., quality growth, compounders)
  - Cyclical but financially solid names where lower rates reduce refinance risk
- Exclude pure “lottery ticket” small caps with poor liquidity

5) Risk & Liquidity Filters
- Market cap > $5B
- Average daily dollar volume > $20M
- No stocks that:
  - Are currently in bankruptcy
  - Have trading halted
  - Are under major fraud/SEC investigation

Instructions:
1) Use the most recent fundamental data, consensus estimates, and valuation metrics available to you.
2) First, explain in 3–5 bullet points how you interpreted each of the criteria above.
3) Then, produce a WATCHLIST TABLE with columns:
   - Ticker
   - Company Name
   - Sector
   - Market Cap (approx)
   - 5Y ROIC or ROE (approx)
   - Net Debt / EBITDA (approx or “Net cash”)
   - Key Valuation Metric vs 5Y Median (e.g., “Forward P/E 18x vs 5Y median 20x”)
   - Why it qualifies as a “Quality Compounder” going into a potential Fed easing cycle (1–2 sentences)

4) After the table, write a 3–5 sentence summary of:
   - The common traits you see across this list
   - How this watchlist could behave under:
     - A December 2025 rate cut
     - A surprise “no cut yet” decision
   - How an individual investor might practically use this list (e.g., watchlist, staggered entries, pairing with risk management)

Output in a clean table + 3–5 sentence explanation why this matters right now.

END PROMPT

Submit to AI model to receive actionable output.

Blue Horseshoe loves AI-driven alpha. Use responsibly.

Sponsored by: StockPilot.io