Companies that consistently increase their sales, margins, or returns on capital are usually rewarded with the best returns, and those that can do all three for years on end are almost always the legendary stocks that return 100 times your money.
The bottom line is that over the long term, earnings growth goes hand in hand with the biggest winners. On that note, here are three market-beating stocks that deserve a spot on your list.
KLA Corporation (KLAC)
5-Year Return: +352%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ:KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Are We Bullish on KLAC?
- Annual revenue growth of 15.5% over the past five years was outstanding, reflecting market share gains this cycle
- Healthy operating margin of 34.9% shows it’s a well-run company with efficient processes, and its rise over the last five years was fueled by some leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its recently improved profitability means it has even more resources to invest or distribute
KLA Corporation is trading at $708.08 per share, or 23.3x forward price-to-earnings. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.
CSW (CSWI)
5-Year Return: +323%
With over two centuries of combined operations manufacturing and supplying, CSW (NASDAQ:CSWI) offers special chemicals, coatings, sealants, and lubricants for various industries.
Why Is CSWI a Good Business?
- Annual revenue growth of 17.8% over the past five years was outstanding, reflecting market share gains this cycle
- Incremental sales over the last two years have been highly profitable as its earnings per share increased by 21.9% annually, topping its revenue gains
- Strong free cash flow margin of 15% enables it to reinvest or return capital consistently, and its growing cash flow gives it even more resources to deploy
At $304.81 per share, CSW trades at 32.5x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
SPX Technologies (SPXC)
5-Year Return: +219%
SPX Technologies (NYSE:SPXC) is an industrial conglomerate catering to the energy, manufacturing, automotive, and aerospace sectors.
Why Will SPXC Outperform?
- Core business can prosper without any help from acquisitions as its organic revenue growth averaged 9.8% over the past two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 34.3% over the last two years outstripped its revenue performance
- Free cash flow margin expanded by 5.1 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
SPX Technologies’s stock price of $138.93 implies a valuation ratio of 22.4x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More
The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we’re here to help you pick them.
Get started by checking out our Top 9 Market-Beating Stocks. 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 United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.
