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.
Long story short, there is a near-perfect correlation between consistent earnings growth and huge winners. On that note, here are three market-beating stocks that deserve a spot on your list.
Griffon (GFF)
Five-Year Return: +315%
Initially in the defense industry, Griffon (NYSE:GFF) is a now diversified company specializing in home improvement, professional equipment, and building products.
Why Could GFF Be a Winner?
- Operating profits increased over the last five years as the company gained some leverage on its fixed costs and became more efficient
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 32.6% over the last five years outstripped its revenue performance
- Free cash flow margin jumped by 10 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Griffon’s stock price of $68.17 implies a valuation ratio of 11.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Allison Transmission (ALSN)
Five-Year Return: +191%
Helping build race cars at one point, Allison Transmission (NYSE:ALSN) offers transmissions to original equipment manufacturers and fleet operators.
Why Do We Like ALSN?
- Offerings are difficult to replicate at scale and lead to a best-in-class gross margin of 47.7%
- Highly efficient business model is illustrated by its impressive 28.8% operating margin, and its operating leverage amplified its profits over the last five years
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Allison Transmission is trading at $103.84 per share, or 10.1x forward EV-to-EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
GE Aerospace (GE)
Five-Year Return: +355%
One of the original 12 companies on the Dow Jones Industrial Average, General Electric (NYSE:GE) is a multinational conglomerate providing technologies for various sectors including aviation, power, renewable energy, and healthcare.
Why Will GE Beat the Market?
- Market share has increased this cycle as its 20.1% annual revenue growth over the last two years was exceptional
- Robust free cash flow margin of 16.2% gives it many options for capital deployment, and its growing cash flow gives it even more resources to deploy
- Rising returns on capital show management is finding more attractive investment opportunities
At $233.25 per share, GE Aerospace trades at 41.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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.