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.
Long story short, there is a near-perfect correlation between consistent earnings growth and huge winners. Keeping that in mind, here are three market-beating stocks that deserve a spot on your list.
Netflix (NFLX)
Five-Year Return: +111%
Launched by Reed Hastings as a DVD mail rental company until its famous pivot to streaming in 2007, Netflix (NASDAQ: NFLX) is a pioneering streaming content platform.
Why Are We Fans of NFLX?
- Global Streaming Paid Memberships have increased by an average of 14.2% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features
- Performance over the past three years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 18.4 percentage points over the last few years, giving the company more capital to invest or return to shareholders
Netflix is trading at $106.63 per share, or 2.8x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Texas Roadhouse (TXRH)
Five-Year Return: +128%
With locations often featuring Western-inspired decor, Texas Roadhouse (NASDAQ: TXRH) is an American restaurant chain specializing in Southern-style cuisine and steaks.
Why Is TXRH on Our Radar?
- Aggressive strategy of rolling out new restaurants to gobble up whitespace is prudent given its same-store sales growth
- Average same-store sales growth of 7.3% over the past two years indicates its restaurants are resonating with diners
- Industry-leading 20.5% return on capital demonstrates management’s skill in finding high-return investments
Texas Roadhouse’s stock price of $175.23 implies a valuation ratio of 27.2x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
HEICO (HEI)
Five-Year Return: +146%
Founded in 1957, HEICO (NYSE: HEI) manufactures and services aerospace and electronic components for commercial aviation, defense, space, and other industries.
Why Is HEI a Good Business?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 9.5% over the past two years
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 26.2% annually
- HEI is a free cash flow machine with the flexibility to invest in growth initiatives or return capital to shareholders
At $316.91 per share, HEICO trades at 61.2x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Stocks We Like Even More
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in 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 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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