3 Market-Beating Stocks with Solid Fundamentals

3 Market-Beating Stocks with Solid Fundamentals

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.

Vita Coco (COCO)

Return Since IPO: +163%

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ:COCO) offers coconut water products that are a natural way to quench thirst.

Why Does COCO Catch Our Eye?

  1. Average unit sales growth of 7.7% over the past two years reflects steady demand for its products

  2. Earnings per share have massively outperformed its peers over the last three years, increasing by 27.3% annually

  3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures, and its returns are growing as it capitalizes on even better market opportunities

Vita Coco is trading at $35.62 per share, or 30.1x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free .

Sterling (STRL)

Five-Year Return: +1,372%

Involved in the construction of a major highway, the Grand Parkway in Houston, TX, Sterling Infrastructure (NASDAQ:STRL) provides civil infrastructure construction.

Why Will STRL Outperform?

  1. Annual revenue growth of 13.4% over the last five years was superb and indicates its market share increased during this cycle

  2. Free cash flow margin expanded by 13.5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends

  3. Rising returns on capital show management is finding more attractive investment opportunities

At $119.52 per share, Sterling trades at 18.6x forward price-to-earnings. Is now the right time to buy? See for yourself in our in-depth research report, it’s free .

AZZ (AZZ)

Five-Year Return: +325%

Responsible for projects like nuclear facilities, AZZ (NYSE:AZZ) is a provider of metal coating and power infrastructure solutions.

Why Are We Fans of AZZ?

  1. Market share has increased this cycle as its 19.4% annual revenue growth over the last two years was exceptional

  2. Operating margin expanded by 5.9 percentage points over the last five years as it scaled and became more efficient

  3. Earnings per share grew by 14.3% annually over the last two years, comfortably beating the peer group average

AZZ’s stock price of $87.69 implies a valuation ratio of 15.7x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free .

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