3 Market-Beating Stocks with Promising Prospects
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3 Market-Beating Stocks with Promising Prospects

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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.

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.

Deckers (DECK)

Five-Year Return: +440%

Established in 1973, Deckers (NYSE:DECK) is a footwear and apparel conglomerate with a portfolio of lifestyle and performance brands.

Why Could DECK Be a Winner?

  1. Strong consumer demand for its brand drove 18% annual revenue growth over the last five years, outperforming sector peers

  2. Free cash flow margin is expected to increase by 2.9 percentage points next year, suggesting the company will have more capital to invest or return to shareholders

  3. Improving returns on capital reflect management’s ability to monetize investments

Deckers’s stock price of $126.81 implies a valuation ratio of 20.1x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

DXP (DXPE)

Five-Year Return: +548%

Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.

Why Do We Like DXPE?

  1. Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient

  2. Share buybacks catapulted its annual earnings per share growth to 34.6%, which outperformed its revenue gains over the last two years

  3. Returns on capital are climbing as management makes more lucrative bets

DXP is trading at $89.15 per share, or 16.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

Eli Lilly (LLY)

Five-Year Return: +349%

Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE:LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.

Why Is LLY a Good Business?

  1. Impressive 33% annual revenue growth over the last two years indicates it’s winning market share this cycle

  2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.6% exceeded its revenue gains over the last five years

  3. Industry-leading 25.8% return on capital demonstrates management’s skill in finding high-return investments