Trying to keep pace with a rocket like NVIDIA (NVDA 4.35%) is no small feat, yet some have managed to do just that. And not just with their stocks, but in sales and earnings, too.
While it's an investing truism that a stock's price will follow earnings growth, which in turn usually comes from higher sales, read on to see how three top Motley Fool contributors identified Thor Industries (THO 1.93%), Netflix (NFLX -0.08%), and Chemours (CC 2.01%) as companies that put NVIDIA's growth to shame.
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Hit the road for high growth
Dan Caplinger (Thor Industries): NVIDIA might have the market cornered on graphics chips, but the company I'm looking at gives its customers a more comfortable place to eat potato chips on long road trips. Thor Industries is a major player in the recreational vehicle industry, and it has taken full advantage of a large growth spurt in demand for RVs. After decades of being relegated to the slow-growth category because of flagging interest among aging travelers, recreational vehicle sales have surged as younger customers have sought low-cost ways to travel more cheaply. That demand, along with cheap gasoline that has made RV travel even more attractive as an alternative to the cattle-driving nature of airplane travel, has pushed sales of entry-level RVs sharply higher.
Thor has pulled out all the stops in seeking growth, bolstering internal investment and also purchasing industry peer Jayco. The result was a 57% growth rate in sales in its most recent quarter, and net income was up more than 40%. In the long run, Thor is optimistic that many of the customers buying entry-level RVs today will come back and upgrade to mid-level and high-end vehicles in the years to come, and that could build an impressive pipeline of business that would foster further growth in the future. Despite facing some inevitable challenges due to the quick nature of the industry's expansion, Thor has put itself in a position to grow rapidly this year and beyond.
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A runaway growth story
Keith Noonan (Netflix): Not many companies have posted better returns than NVIDIA over the last five years, but, with its share price up roughly 1,690% over the stretch, Netflix is one of the standout stocks that has delivered even more impressive gains.
The comparison is even starker if you look at performance over a longer timeline, with shares of the video streaming company up over 5,300% across the last decade, while NVIDIA has posted gains of roughly 530%. That's not to diminish the chipmaker's accomplishments, but when it comes to growth, Netflix is in another category altogether.
What started out as a mail-based DVD rental service has expanded to become the largest source of North American internet traffic and one of the leading producers of original content worldwide. The company's last fiscal year saw it add 19 million new streaming customers, and its addition of 5 million additional new subscribers in its most recently completed quarter suggests that it can continue to post fantastic growth thanks to expansion in international markets.
Netflix now boasts over 100 million subscribers across 190 countries, and the company's focus on strengthening its content offerings and building a diverse lineup of original shows and films with global appeal will likely continue to pay off for shareholders. With most of the heavy infrastructure costs associated with expanding its international reach now in the rear-view mirror, profitability should begin to accelerate -- which could mean the company's best days are still ahead.
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A chemical reaction
Rich Duprey (Chemours): Titanium dioxide, or TiO2, is the whitest stuff on Earth and is found in everything from sunscreen and toothpaste to milk and cookies (the cream in Oreos are whitened with it). Paint, however, is the primary end user of the pigment, and analysts see the global TiO2 market growing by a compounded 9% annual rate through 2025 to $66.9 billion.
Chemours is the largest producer of the pigment with an 18% share of the market. Spun off from DuPont (DD) in 2015, the performance chemicals specialist has benefited from the improving conditions in the TiO2 market, allowing it to raise prices three times last year, actions that were quickly followed by third-place Huntsman and fourth-place Tronox.
Although Chemours got off to a rough start following its IPO, it has since made up for lost time, quadrupling in value over the past year and rising fivefold from its 52-week low. It was able to achieve those remarkable gains by bolstering its financial position by cutting expenses, cutting its workforce, and shedding or shutting non-core assets (those price hikes didn't hurt, either). Last year, it was able to reduce costs by $200 million and improve operating cash flows by $412 million, all the while retiring some $385 million in long-term debt. It subsequently doubled its adjusted earnings before interest, taxes, depreciation, and amortization margins to $157 million.
Chemours stock has gone from a low of less than $6 a share to than $46 a stub, though it has given back some of those gains and now trades at just under $40 a share. To put Chemours' meteoric rise in perspective, NVIDIA "only" tripled in value.
There are still a number of risks confronting the performance chemicals specialist, but Chemours is in a much better position than when it was set free from DuPont laden with debt and toxic assets that its former parent wanted to shield itself from. Also, the TiO2 market does tend to run in cycles, so the substantial growth it's enjoying now will serve to pad its business when the tide runs out.
