The best-performing stocks typically have robust sales growth, increasing margins, and rising returns on capital, and those that can maintain this trifecta year in and year out often become the legends of the investing world.
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 deserve a spot on your list.
Commvault Systems (CVLT)
Five-Year Return: +445%
Originally formed in 1988 as part of Bell Labs, Commvault (NASDAQ: CVLT) provides enterprise software used for data backup and recovery, cloud and infrastructure management, retention, and compliance.
Why Do We Like CVLT?
- ARR growth averaged 17.6% over the last year, showing customers are willing to take multi-year bets on its offerings
- Software is difficult to replicate at scale and leads to a stellar gross margin of 81.9%
- CVLT is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
Commvault Systems’s stock price of $163.85 implies a valuation ratio of 6.7x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Tecnoglass (TGLS)
Five-Year Return: +2,701%
The first-ever Colombian company to trade on the NASDAQ, Tecnoglass (NYSE: TGLS) is a manufacturer of architectural glass, windows, and aluminum products.
Why Is TGLS a Good Business?
- Annual revenue growth of 15.6% over the last five years was superb and indicates its market share increased during this cycle
- Highly efficient business model is illustrated by its impressive 27% operating margin, and its operating leverage amplified its profits over the last five years
- Earnings per share grew by 39.8% annually over the last five years, massively outpacing its peers
At $70.02 per share, Tecnoglass trades at 16.4x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Kirby (KEX)
Five-Year Return: +170%
Transporting goods along all U.S. coasts, Kirby (NYSE: KEX) provides inland and coastal marine transportation services.
Why Could KEX Be a Winner?
- Operating margin improvement of 31.6 percentage points over the last five years demonstrates its ability to scale efficiently
- Share buybacks catapulted its annual earnings per share growth to 61.3%, which outperformed its revenue gains over the last two years
- Returns on capital are increasing as management’s prior bets are starting to bear fruit
Kirby is trading at $99.30 per share, or 14.7x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
The elections are now behind us. With rates dropping and inflation cooling, many analysts expect a breakout market - and we’re zeroing in on the stocks that could benefit immensely.
Take advantage of the rebound by checking out our Top 5 Strong Momentum 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 Comfort Systems (+751% five-year return). Find your next big winner with StockStory today for free.
