Valuing High-Quality Stocks at the Right Price: A Santa Wishlist Strategy for 2026

Investors seeking long-term wealth creation often gravitate toward high-quality compounders-companies with durable competitive advantages, efficient capital allocation, and the potential for sustained earnings growth. However, identifying these stocks at attractive valuations requires a blend of patience, rigorous analysis, and a clear understanding of intrinsic value. As 2026 approaches, three names stand out as compelling candidates for a "Santa Wishlist" strategy: MercadoLibre, Intuit, and Fastenal. Each offers a unique combination of strong moats, capital efficiency, and undervaluation potential, making them worthy of closer scrutiny.

MercadoLibre: A Latin American E-Commerce Powerhouse with a Fintech Edge

MercadoLibre (MELI) has long been a dominant force in Latin America's e-commerce and fintech ecosystems. Its third-quarter 2025 results underscored continued growth, with robust revenue and free cash flow generation. Analysts project free cash flow to reach $10.7 billion by 2027, a trajectory that, when plugged into a discounted cash flow model, suggests the stock is undervalued by 31.4% based on an intrinsic value estimate of $2,906.84 per share.

The company's moat is anchored in its network effects: MercadoLibre's platform connects millions of buyers and sellers, while its fintech services-such as Mercado Pago-offer sticky, high-margin offerings. Its capital efficiency is equally impressive, with a Return on Equity (ROE) of 39.03% in Q3 2025, down slightly from 43.06% in Q2 but still well above historical averages. This reflects MercadoLibre's ability to generate substantial returns for shareholders despite operating in a competitive market.

Intuit: A Wide-Moat Innovator in a High-Margin Space

Intuit (INTU) exemplifies the classic high-quality compounder. The company's fiscal 2025 results highlighted 20% revenue growth and 38% EPS growth, driven by its AI-powered tools in TurboTax and QuickBooks. These innovations have fortified Intuit's wide economic moat, characterized by recurring revenue streams, brand loyalty, and high switching costs for users.

Valuation metrics suggest Intuit is trading at a reasonable premium. At 28.6 times forward earnings, the stock offers a 23% upside potential according to analyst price targets, with some projecting a peak of $971 per share by 2028 according to analyst price targets. While its ROE has declined to 21.36% in TTM (trailing twelve months) from a five-year average of 37.28% according to data, Intuit's Return on Invested Capital (ROIC) of 14.65% in 2025-up 27.78% from its three-year average-demonstrates effective capital allocation based on 2025 data.

However, risks persist. The small business (SMB) segment's softer guidance and potential vulnerabilities in the Credit Karma business if credit conditions worsen could temper growth. Investors must weigh these risks against Intuit's strong historical performance and its ability to adapt through innovation.

Fastenal: A Steady Hand in the Industrial Supply Sector

Fastenal (FAST) may not capture headlines like its tech counterparts, but its performance in Q3 2025 was nothing short of impressive. The company reported 11.7% year-over-year net sales growth, driven by market share gains and a 20.7% operating margin. Its financial position is equally robust, with a P/E ratio of 39.97, a low debt-to-equity ratio of 0.13, and a current ratio of 4.67 based on Q3 2025 financials.

Fastenal's moat lies in its role as a critical supplier to industrial and manufacturing clients, a sector with high switching costs and recurring demand. Its capital efficiency is highlighted by a ROE of 32.69% in December 2025-well above its 30.69% historical average-and a ROIC of 29.84%, slightly below its 30.13% three-year average but still impressive according to 2025 data. These metrics underscore Fastenal's ability to generate consistent returns in a cyclical industry.

Balancing Patience with Actionable Entry Points

The key to a successful Santa Wishlist strategy lies in balancing patience with disciplined entry points. For MercadoLibre, the 31.4% undervaluation identified via DCF analysis based on DCF analysis suggests a compelling opportunity for long-term investors willing to ride out near-term volatility. Intuit's valuation, while not as cheap as MercadoLibre's, offers a more moderate risk-reward profile, particularly for those who believe in its AI-driven growth story. Fastenal, with its stable cash flows and strong capital efficiency, serves as a defensive counterbalance to the more volatile tech plays.

Investors should use valuation metrics like P/E ratios, DCF models, and ROIC to identify mispricings while remaining mindful of macroeconomic risks. For instance, Intuit's exposure to SMBs and credit conditions necessitates closer monitoring of interest rate trends, while MercadoLibre's Latin American operations face currency and regulatory headwinds.

Conclusion: A Diversified Approach to Compounding Wealth

In a market increasingly dominated by speculative fervor, the three companies discussed here offer a refreshing contrast: durable moats, efficient capital use, and attractive valuations. MercadoLibre's fintech-driven growth, Intuit's AI-powered innovation, and Fastenal's industrial resilience collectively form a diversified portfolio of compounders. By focusing on these high-quality names and entering at the right price, investors can position themselves to benefit from decades of compounding-a strategy that, as Warren Buffett once said, "requires not doing anything."