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.
Long story short, there is a near-perfect correlation between consistent earnings growth and huge winners. On that note, here are three market-beating stocks that could turbocharge your returns.
Lam Research (LRCX)
5-Year Return: +168%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ:LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Are We Fans of LRCX?
- Excellent operating margin of 28.4% highlights the efficiency of its business model
- Strong free cash flow margin of 29.2% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
Lam Research is trading at $74.02 per share, or 20.1x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
AAON (AAON)
5-Year Return: +171%
Backed by two million square feet of lab testing space, AAON (NASDAQ:AAON) makes heating, ventilation, and air conditioning equipment for different types of buildings.
Why Are We Bullish on AAON?
- Market share has increased this cycle as its 16.2% annual revenue growth over the last two years was exceptional
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 27.7% annually
- ROIC punches in at 21.8%, illustrating management’s expertise in identifying profitable investments
At $79.79 per share, AAON trades at 27.2x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
Rollins (ROL)
5-Year Return: +101%
Operating under multiple brands like Orkin and HomeTeam Pest Defense, Rollins (NYSE:ROL) provides pest and wildlife control services to residential and commercial customers.
Why Is ROL a Good Business?
- Offerings are mission-critical for businesses and lead to a best-in-class gross margin of 52%
- Robust free cash flow margin of 16.7% gives it many options for capital deployment
Rollins’s stock price of $51.55 implies a valuation ratio of 47.1x 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
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 Growth Stocks for this month. 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.