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.
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 with room for further growth.
Datadog (DDOG)
Five-Year Return: +137%
Named after a database the founders had to painstakingly look after at their previous company, Datadog (NASDAQ: DDOG) is a software-as-a-service platform that makes it easier to monitor cloud infrastructure and applications.
Why Is DDOG a Good Business?
- Customers view its software as mission-critical to their operations as its ARR has averaged 29.3% growth over the last year
- Software platform has product-market fit given the rapid recovery of its customer acquisition costs
- Strong free cash flow margin of 28.9% enables it to reinvest or return capital consistently
Datadog’s stock price of $106.50 implies a valuation ratio of 11.6x forward price-to-sales. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Monday.com (MNDY)
Return Since IPO: +59.4%
Founded in 2014 and named after the dreaded first day of the work week, Monday.com (NASDAQ: MNDY) is a software-as-a-service platform that helps organizations plan and track work efficiently.
Why Are We Backing MNDY?
- Ability to secure long-term commitments with customers is evident in its 33.3% ARR growth over the last year
- Prominent and differentiated software results in a best-in-class gross margin of 89.3%
- MNDY is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $285.04 per share, Monday.com trades at 12.3x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.
Sea (SE)
Five-Year Return: +144%
Founded in 2009 and a publicly traded company since 2017, Sea (NYSE: SE) started as a gaming platform and has since expanded to offer a variety of services such as e-commerce, digital payments, and financial services across Southeast Asia.
Why Are We Bullish on SE?
- 20.8% annual increases in its average revenue per user over the last two years show its platform is resonating with power users
- Incremental sales over the last three years have been highly profitable as its earnings per share increased by 38.5% annually, topping its revenue gains
- Free cash flow margin grew by 17.3 percentage points over the last few years, giving the company more chips to play with
Sea is trading at $133.70 per share, or 25x forward EV-to-EBITDA. Is now the time to initiate a position? See for yourself in our in-depth 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 6 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.
