The stock market is up about 30% over the last three years, which has fueled solid financial returns for most investors. A few investments have done far better than that, though, thanks to sharply improving operating results that consistently trounced expectations.
Below, we'll look at three of these standout performers -- Vail Resorts (MTN 1.31%), Domino's Pizza (DPZ 1.97%), and Best Buy (BBY 3.35%) -- with an eye toward whether any of them represent solid buys today.
Vail Resorts' stable business
An unusually weak ski season (snowfall set a 30-year low at several of its resorts) has kept a lid on Vail Resorts' growth this year. In fact, skier visits declined this past winter compared to the prior year.
Yet the company still managed to increase revenue in its peak season thanks to higher ticket prices and its booming season pass sales. Meanwhile, Vail's operations continue to benefit from its large resort footprint, which -- thanks to recent acquisitions like Whistler Blackcomb -- now includes Canada and Australia in addition to its core Colorado properties. These new resorts have helped lift annual ski visits to 12 million, up from 7 million back in 2012.
Vail's focus today is on raising the value of its current properties. That's why management is pouring resources into capital improvements including new lifts. Yet a steady flow of season pass sales, plus increased visitation during the warmer months, means financial returns won't take a back seat during this period of ramped-up investment. On the contrary, even after funding its biggest capital spending program yet, Vail Resorts' dividend was recently raised by 40%, as management said they were "increasingly confident in the strong cash flow generation and stability of our business model."
Domino's market-beating growth
Domino's Pizza investors were nervous, as sales growth slowed at the end of 2017. Sure, the delivery giant beat rivals like Pizza Hut and Papa John's, but gains weren't nearly as strong as they had been. Comparable-store sales, or sales at existing locations, increased 8% in 2017 to mark the first time comps hadn't expanded at a double-digit rate in three years.
Image source: Getty Images.
That appeared to be just a temporary speed bump, though. The chain recently announced that comps sped up to an 8% rate in the first quarter from 4% in the prior quarter, thanks to a solid mix of growth in both its domestic and international segments.
The healthy sales gains mean Domino's aggressive expansion strategy can continue as management looks to operate as many as 8,000 locations in the U.S., up from 5,000 today. And with most of its orders coming from digital sales channels, it's clear that e-commerce innovations will play a key role in Domino's ability to protect its dominant market share position from here.
Best Buy's turnaround
Things have gone remarkably well for Best Buy lately, especially considering how vulnerable investors thought the retailer was to "showrooming," or the shopper habit of examining products at brick-and-mortar stores before ordering them at lower prices from online rivals.
Image source: Getty Images.
Best Buy made the appropriate changes to adjust to that trend, and its strategic initiatives are clearly working. Comps gains sped up to a 6% pace in fiscal 2018 from a flat result in the prior year even as profitability held steady. CEO Hubert Joly and his team are expecting comps gains to slow back down to about 2% in fiscal 2019, and earnings will also be hurt by more investments in its growth initiatives. However, Best Buy's strong financial position should allow it to navigate this tricky retail environment better than most of its rivals, and that's great news for its shareholders.
The best pick for you
Each of these companies is benefiting from long-term, fundamental improvements to its business, and so investors shouldn't be surprised to see market-beating gains ahead for all three of them. Domino's seems like the most attractive choice out of the bunch, in my view. Its small, efficient store footprint makes the restaurant chain ideally suited for the consumer shift toward home food delivery. Yes, Domino's leans heavily on debt, but that risk appears reasonable given the large global market potential at stake.
