There is a good reason that sales are "the top line" in income statements; sales growth says a lot about key factors like competitive strengths and long-term potential for growth. Amazon.com (AMZN -1.65%), Netflix (NFLX 1.74%), priceline.com (BKNG -0.43%), Under Armour (UAA -2.34%), and MercadoLibre (MELI -0.45%) have compounded sales growth at more than 20% per year in the last five years. Furthermore, the five companies are strong enough to sustain rapid expansion for years to come.
Amazon, the disruptor
Amazon is unquestioningly the most disruptive force in the retail industry over the last decade. The company has grown from an online bookstore to a major retailer selling all kinds of products and services at competitively low prices. In addition to this, Amazon has ventured into promising growth areas like cloud computing, hardware and digital content.
Scale advantages, technological strength and an unparalleled distribution network differentiate Amazon from the competition.The online retail king has produced sales growth of 32.7% per year over the last five years, and the company continues performing remarkably strongly considering its size: Amazon reported an annual sales increase of 24% to $17.09 billion in the third quarter of 2013.
Netflix and the future of video
Netflix has consolidated its leadership position to profit from the future of video in the long term. The company had more than 40 million global subscribers as of the latest earnings release, up from 30 million in the same quarter of the previous year.
The company's large user base, internal recommendation software and proprietary technologies provide an edge when it's deciding which content to acquire or produce. Judging by the remarkable success of productions like House of Cards and Orange Is the New Black, Netflix knows how to capitalize on the enormous amounts of information it collects from users.
Revenues have grown at 24.5% annually in the last five years, and the company reported a sales increase of more than 22% to over $1.1 billion for the third quarter of 2013.
Priceline continues gaining altitude
Priceline is the global leader among online travel agencies, and the network effect represents a powerful source of competitive strengths for the company. Travelers want to go where they can find more and better deals, and hotel operators, airlines, and car rental businesses choose to partner with the online travel companies that can bring in more customers.
The service becomes more valuable as the company becomes bigger, and this is producing exceptional growth rates for investors. Revenues have expanded at 30.1% annually over the last five years, and Priceline continues firing on all cylinders as of the last quarter, with an increase of more than 33% in sales to nearly $2.27 billion.
Under Armour is running forward
Under Armour is focused on high-performance athletic apparel, and the company has a strong culture of innovation when it comes to aspects like technology, materials, and designs. Products are designed to be light and breathable, and to provide moisture management -- a signature innovation and differentiating factor for Under Armour.
The company has been widely successful in gaining market share in a very competitive industry: Under Armour has increased sales at 24.8% per year in the last five years. There is no slowdown in sight as of the third quarter; sales jumped by 26% versus the same period in the prior year.
CEO Kevin Plank describes Under Armour as a $10 billion brand in a $2 billion shell, and aims to sustain sales growth above 20% annually in the coming years. This may be an ambitious goal, but the way things are going, it doesn't sound crazy at all.
MercadoLibre offers exceptional growth prospects
MercadoLibre is the undisputed e-commerce leader in Latin America, and this provides exceptional growth opportunities for investors in the company. Latin America is a high-growth region, and e-commerce is a high-growth business, so MercadoLibre has plenty of room for long-term expansion.
Management estimates that only 1.5% of retail transactions are done online in Latin America and just 10% of the population shops online in the region. As Internet penetration deepens and people become increasingly familiar with e-commerce in general and MercadoLibre in particular, the company stands to benefit from strong secular growth drivers.
MercadoLibre has increased sales at 34.4% per year through the last five years, and revenues in the last quarter grew at a remarkable 27%.
Bottom line
Revenue growth can be a crucial aspect to consider when making investment decisions. Not only from a financial point of view, but also in terms of competitive performance and customer demand, sales can provide a lot of valuable information about a business.
These five companies have delivered exceptional sales growth in recent years, and they have what it takes to sustain that growth in the future. Chances are they will generate substantial returns for investors in the long term.
