Kayode Omotosho
4 min read
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. Keeping that in mind, here are three market-beating stocks that deserve a spot on your list.
Five-Year Return: +183%
Founded in 1919, Hilton Worldwide (NYSE:HLT) is a global hospitality company with a portfolio of hotel brands.
Why Is HLT Interesting?
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Share repurchases over the last five years enabled its annual earnings per share growth of 45.6% to outpace its revenue gains
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Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its rising returns show it’s making even more lucrative bets
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Improving returns on capital reflect management’s ability to monetize investments
Hilton is trading at $256.96 per share, or 29.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Five-Year Return: +484%
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE:PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Why Is PSTG a Top Pick?
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ARR growth averaged 22.4% over the past two years, showing customers are willing to take multi-year bets on its offerings
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Incremental sales over the last five years have been highly profitable as its earnings per share increased by 34.1% annually, topping its revenue gains
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Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety
At $98.67 per share, Pure Storage trades at 44.7x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
Five-Year Return: +182%
Starting as a credit card company in 1988 before expanding into a full-service bank, Capital One (NYSE:COF) is a financial services company that offers credit cards, auto loans, banking services, and commercial lending to consumers and businesses.
Why Does COF Stand Out?
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Market share has increased this cycle as its 15% annual revenue growth over the last two years was exceptional
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Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 44.9% outpaced its revenue gains
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ROE of 10.9% shows management can invest its resources competently
