The bull market has been kind to stocks, with major market benchmarks like the Dow and S&P 500 roughly quadrupling since their lows in early 2009. Even when you look back at the past 10 years and the collapse in the market in 2008, the market has surpassed its old highs by dramatic margins.
A few stocks have delivered even better performance over that time period. When you look at Domino's Pizza (DPZ +1.05%), Booking Holdings (BKNG +3.48%), and Ulta Beauty (ULTA +1.23%), you'll find that investing just $7,000 to purchase shares of any of those three companies back in 2008 would have left you now with more than $130,000 each. Let's look more closely to see how these stocks have done so well and whether they can keep building on their success in the future.
DPZ Total Return Price data by YCharts.
Domino's delivers
Domino's Pizza has been the best-performing stock on this list, with gains of roughly 1,870% over the past decade. That's been enough to turn an initial $7,000 into almost $138,000. The move comes as part of one of the most impressive turnarounds ever. A decade ago, most people had extremely negative opinions of Domino's, largely centering on the quality of its pizza. Some companies would simply have sunk into their low-quality niche and made the best of a bad situation.
Image source: Domino's.
Domino's instead chose to revamp its entire operations. It brought in experts to improve the taste of its pizza and to expand its menu selection. It renovated its store locations to make them more attractive, and it upgraded its technology to facilitate mobile and online ordering to keep up with changing consumer trends. Expansion led to Domino's stores popping up across the globe. The result has been that Domino's now claims to be the largest pizza chain on the planet, and solid gains have sustained the stock's positive momentum. With a successful franchise model that depends on healthy partnerships between the company and its store owners, Domino's has more room to grow in 2018 and beyond.
Book it
Booking Holdings is a new name for investors, but the online travel giant formerly known as Priceline Group is an old favorite among growth investors. Gains of about 1,770% over the past 10 years would have turned a $7,000 investment into almost $131,000 today. Booking's success has come largely as a result of its early recognition of the value of building up strong relationships internationally, offering customers a wide selection of hotels and other travel services worldwide. That produced a competitive advantage in an area in which peers in the space have had to rush to catch up.
Booking's name change reflects its desire to refocus on its core Booking.com hotel reservation system, but the company's real promise is in its wide array of different online and mobile travel resources. With services that include making restaurant reservations on OpenTable and comparing multiple websites on Kayak, Booking's portfolio of properties will give it an edge in an industry that's already seen plenty of consolidation. Declines in growth rates could slow the pace of Booking's share-price gains, but there's still room for the company to expand the size of its business.
Sitting pretty
Finally, Ulta Beauty has been a giant in the cosmetics and salon industry, with its innovative retail and salon stores producing an excellent combination of product and services sales. A gain of 1,790% over the past 10 years would have left investors putting $7,000 into the stock in 2008 with shares worth more than $132,000. The opportunity to purchase beauty supplies in the same trip that one actually uses them in visiting the in-store salon has been a successful way to spur business.
Of these three stocks, Ulta is the only one that has seen a dramatic pullback recently, with substantial declines over the past year or so that have taken the stock down from even loftier heights. Sales and profits are still rising quickly, but comparable-store sales growth has slowed to single-digit percentage levels, and rising expenses have led to falling margin figures. CEO Mary Dillon has plans to get Ulta moving back in the right direction again, but it could take time for the salon giant to return to its former glory.
Put time on your side
These stocks are extraordinary, but the benefit of having a 10-year time horizon is that you can afford to let the best stocks in the market keep making money for you. By seeking out great long-term prospects, you can improve your chances of finding the next Ulta, Booking, or Domino's to add to your portfolio.
