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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 could turbocharge your returns.
Booking (BKNG)
5-Year Return: +198%
Formerly known as The Priceline Group, Booking Holdings (NASDAQ:BKNG) is the world’s largest online travel agency.
Why Will BKNG Outperform?
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Room Nights Booked have increased by an average of 13.6% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
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Share repurchases over the last three years enabled its annual earnings per share growth of 60.1% to outpace its revenue gains
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Robust free cash flow margin of 33% gives it many options for capital deployment, and its improved cash conversion implies it’s becoming a less capital-intensive business
Booking’s stock price of $5,007 implies a valuation ratio of 18.5x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Chipotle (CMG)
5-Year Return: +276%
Born from a desire to offer quick meals with fresh, flavorful ingredients, Chipotle (NYSE:CMG) is a fast-food chain known for its healthy, Mexican-inspired cuisine and customizable dishes.
Why Are We Backing CMG?
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Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
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Same-store sales growth averaged 7.7% over the past two years, showing it’s bringing new and repeat diners into its restaurants
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Massive revenue base of $11.31 billion makes it a household name that influences purchasing decisions
Chipotle is trading at $55.30 per share, or 41.1x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Deckers (DECK)
5-Year Return: +378%
Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.
Why Is DECK a Top Pick?
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18% annual revenue growth over the last five years surpassed the sector average as its brand resonated with consumers
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Free cash flow margin is expected to increase by 2.6 percentage points next year, suggesting the company will have more capital to invest or return to shareholders
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Rising returns on capital show management is finding more attractive investment opportunities