The market has returned an impressive 66% over the past five years, and yet a few individual stocks have dramatically outperformed that result.
Below, we'll take a look at three of the biggest winners since mid-2013. Read on to see why Stamps.com (STMP +0.00%), National Beverage (FIZZ 1.08%), and Adobe (ADBE +3.67%) have gained at least 400% over that time period.
Image source: Getty Images.
A shipping model that works
Stamps.com helps customers ship products through the postal service, and that is a good business to be in when digital sales are surging. According to official statistics, e-commerce is responsible for 9.5% of the broader retailing industry today, up from 5.5% in 2013.
That tailwind has helped produce dramatic returns for Stamps.com shareholders. Revenue reached $470 million in 2017, compared to $128 million in 2013. Profits have soared to over $160 million from $34 million in that period, too.
These gains are evidence of a dominant market position in this industry niche, but investors are just as excited about the company's lucrative business model. Its subscription-based service approach allows for predictable income while also charging higher rates as shipping volume rises. That's a key reason why its average annual revenue per user jumped 15% last year to over $600. Continued growth in both average monthly fees and the pool of subscribers has helped its stock price gains continue into 2018.
Sparkling results
Like Stamps.com, National Beverage has benefited lately from a mix of favorable industry trends and strong business execution. Its portfolio, focused on sparkling waters, is anchored by the LaCroix franchise. It has powered the type of market-thumping sales and profit growth that investors crave. Annual revenue is up 51% in just the last three years, and earnings per share have doubled in that period thanks to the combination of strong sales growth and rising drink prices. Traditional cola peers, meanwhile, have been posting roughly flat volume and only modest profit gains.
Image source: Getty Images.
National Beverage faces big challenges as it seeks to expand its retailing network while fending off deep-pocketed competitors. But if the company can continue to satisfy its customers with its new sparkling water offerings, it has a good shot at holding its leading position in this fast-growing industry.
Profiting from the cloud
The market for digital content imaging has grown quickly over the past five years, and Adobe has done a good job at using its brand -- and its significant development resources -- to extend its lead in that lucrative niche. Sales have shot up to over $7 billion, from $4 billion, and profits have grown even faster as its business transitioned to a cloud-based, recurring revenue platform. Subscription services accounted for 84% of the business last year, in fact, up from 67% just two years prior. That success helped earnings last year reach $3.43 per share, up sharply from $0.58 in 2013.
That level of growth has required significant resources, and research & development spending shot up to $1.22 billion last year, from $862 million in 2015. But management sees a direct link between these investments and increasing cloud subscriptions, and so investors can expect Adobe to continue directing cash toward its product development assets.
Each of these stocks has structural advantages that are being amplified by smart moves by management and solid improvements in the companies' product offerings. That's a formula for the type of market-thumping sales and profit gains that investors tend to reward with spiking share prices.
