Investors seeking steady wealth-building opportunities are turning their attention to companies with the rare ability to compound growth over time.
London Stock Exchange Group PLC (LSE:LSEG) and Burberry Group PLC (LSE:BRBY) have emerged as standouts in this regard, according to Panmure Liberum, which points to their resilient business models and renewed momentum as reasons for continued optimism.
For LSEG, compounding has been driven by its transformation from a traditional exchange into a global data and analytics business.
It now collects and processes data at every stage of the trading cycle, from pre-trade analysis through to settlement.
The Workspace platform sits at the heart of this model, providing clients with tools that draw on proprietary data gathered by businesses such as FTSE Russell.
Ownership of this data is a key advantage. “This end-to-end model is more profitable and defensible than redistribution-only players,” Panmure said, highlighting the steady growth in operating margins from high-value products that are difficult for rivals to replicate.
LSEG delivered a 6.1% increase in revenues for 2024, marking another year of steady gains.
The upcoming half-year results are expected to show further progress, with analysts forecasting 5.5% growth in group revenue and a 7.7% rise in operating profit, driven by ongoing demand for data and analytics.
Burberry, meanwhile, has shown how compounding can return after a period of turbulence.
Shares in the luxury group have rallied 25% since Panmure's last recommendation, outpacing the wider sector as early signs of turnaround have fed through to improving analyst forecasts.
Burberry’s “Forward” strategy is credited with stabilising sales, particularly in Europe and the US, and upgrades to earnings forecasts have kept coming as sentiment recovers.
Panmure Liberum describes both LSEG and Burberry as “steady compounders”, businesses that can generate reliable, repeated growth even in uncertain conditions.
For investors, the power of compounding lies in the cumulative effect of consistent earnings gains, which, when reinvested, can deliver meaningful increases in value over time.
As Panmure Liberum notes, these qualities are in demand as markets navigate continued policy, trade, and geopolitical risks.