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.
It’s clear there’s a strong connection between sustained earnings growth and hall-of-fame returns. Keeping that in mind, here are three market-beating stocks with room for further growth.
ServiceNow (NOW)
Five-Year Return: +166%
Founded by Fred Luddy, who coded the company's initial prototype on a flight from San Francisco to London, ServiceNow (NYSE: NOW) is a software provider helping companies automate workflows across IT, HR, and customer service.
Why Is NOW a Top Pick?
- ARR growth averaged 22.7% over the last year, showing customers are willing to take multi-year bets on its offerings
- Healthy operating margin of 12.4% shows it’s a well-run company with efficient processes, and its rise over the last year was fueled by some leverage on its fixed costs
- Strong free cash flow margin of 31.3% enables it to reinvest or return capital consistently
ServiceNow is trading at $718.89 per share, or 11.6x forward price-to-sales. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Shopify (SHOP)
Five-Year Return: +94.1%
Originally created as an internal tool for a snowboarding company, Shopify (NYSE: SHOP) provides a software platform for building and operating e-commerce businesses.
Why Will SHOP Outperform?
- Payment activity on its platform is soaring as its TPV growth averaged 32% over the last year, enabling the company to collect more fees and upsell additional services like banking
- Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale
- Operating margin improvement of 32.2 percentage points over the last year demonstrates its ability to scale efficiently
At $76.20 per share, Shopify trades at 9.2x forward price-to-sales. Is now a good time to buy? Find out in our full research report, it’s free.
Comfort Systems (FIX)
Five-Year Return: +790%
Formed through the merger of 12 companies, Comfort Systems (NYSE: FIX) provides mechanical and electrical contracting services.
Why Are We Bullish on FIX?
- Average backlog growth of 36.3% over the past two years shows it has a steady sales pipeline that will drive future orders
- Additional sales over the last two years increased its profitability as the 66.1% annual growth in its earnings per share outpaced its revenue
- Improving returns on capital reflect management’s ability to monetize investments
Comfort Systems’s stock price of $293.51 implies a valuation ratio of 17.6x 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
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.
