Stocks that outperform the market usually share key traits such as rising sales, expanding margins, and increasing returns on capital. The select few that can do all three for many years are often the ones that make you life-changing money.
It’s clear there’s a strong connection between sustained earnings growth and hall-of-fame returns. Taking that into account, here are three market-beating stocks that could turbocharge your returns.
Costco (COST)
Five-Year Return: +221%
Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ:COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.
Why Are We Backing COST?
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 4.4% over the past two years
- Massive revenue base of $264.1 billion makes up for its weaker gross margin and makes it a household name that influences purchasing decisions
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Costco is trading at $978.75 per share, or 51.4x forward price-to-earnings. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.
Powell (POWL)
Five-Year Return: +635%
Originally a metal-working shop supporting local petrochemical facilities, Powell (NYSE:POWL) has grown from a small Houston manufacturer to a global provider of electrical systems.
Why Is POWL a Top Pick?
- Annual revenue growth of 38.5% over the past two years was outstanding, reflecting market share gains this cycle
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 337% annually
- Returns on capital are growing as management capitalizes on its market opportunities
At $188 per share, Powell trades at 13x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Quanta (PWR)
Five-Year Return: +677%
A construction engineering services company, Quanta (NYSE:PWR) provides infrastructure solutions to a variety of sectors, including energy and communications.
Why Are We Bullish on PWR?
- Backlog has averaged 23.8% growth over the past two years, showing it has a pipeline of unfulfilled orders that will support revenue in the future
- Projected revenue growth of 13.5% for the next 12 months suggests its momentum from the last two years will persist
- Earnings growth has trumped its peers over the last two years as its EPS has compounded at 18.6% annually
Quanta’s stock price of $288.50 implies a valuation ratio of 27.8x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free.