The power of compounding returns means that you can build up a large retirement portfolio with relatively small initial investments. The idea is to put money to work that you don't need for many years, and to steadily add to your holdings over time.

It helps if you can pick investments that perform better than average, of course. And while there's no surefire way to find these winners ahead of time, you can boost your odds by focusing on high quality businesses that are trading at attractive prices. Let's look at a few of these types of stocks here in early 2024.

1. Ulta Beauty

Ulta Beauty (ULTA -0.40%) isn't having a lovely 2023 fiscal year. Comparable-store sales were up just 7% in the three quarters that ended in late October, the company said in late November, down from a 16% increase a year earlier. Profit margin is declining as well, and so it makes some sense that the stock would have missed most of the 2023 market rally.

Look closer and you'll see plenty of reason for optimism about the beauty product retailer's long-term opportunities. Ulta is enjoying healthy traffic trends, for example, and most of its slowdown this past year has come from the price cuts that have affected the entire industry.

Its 15% operating profit margin is down from 17% a year ago, but profitability is still strong and sitting well above the pre-pandemic rate. Toss in the potential for many more store launches over the next decade, and you've got the factors you need for market-thumping returns over time .

2. Coca-Cola

Another great way to amplify your returns is to include some dividend stocks in your portfolio. These companies provide instant passive income along with the potential for solid capital gains. Coca-Cola (KO) offers a sparkling mix of these two factors at a good price.

The beverage giant boosted sales through a tough consumer spending environment in 2023. Rising case volume over the last several quarters is confirmation of its pricing power, which translates directly into higher profits. Coke's profit margin of 30% of sales is roughly double that of rival PepsiCo.

Yet, the stock is available at a discount after its 7% drop last year made it one of the worst-performing stocks on the Dow Jones Industrial Average. Investors are concerned about slowing growth and the potential for demand to weaken further in the coming years.There's a good chance Coke stock will rebound in 2024, but in the meantime, investors can patiently collect a generous dividend that's now yielding above 3%.

3. Electronic Arts

Electronic Arts (EA 0.46%) is a compelling stock that's looking even better after its relatively poor performance in 2023. The video game publisher is highly profitable and generates roughly $8 billion of annual sales thanks to its success in a wide range of gaming niches, even if sales growth has slowed significantly following the pandemic.

Wall Street pushed rival Take-Two Interactive's stock much higher last year on optimism over its expected sales ahead. But EA already has that impressive sales footprint. And yet the two stocks are valued at the same price-to-sales ratio of 5.

Both companies have a busy pipeline of releases slated for 2024 and beyond. Take-Two's calendar has a bigger potential to lift sales over the next few years due to highly anticipated releases like Grand Theft Auto 6.

But with EA's stock, an investor gets exposure to this attractive software-as-a-service industry with lower risk as a consequence of its established content portfolio. That's why even a small initial investment in Electronic Arts stock could grow much larger over the long term.