It has been relatively easy to generate positive returns recently. Investors who own a simple S&P 500 index fund have seen their holdings rise 36% over the last three years, not counting the dividend income and the power of reinvesting those gains.
Many individual stocks have fared much better -- or worse -- but today we're looking at a few of the biggest winners who also appear primed for continued dominance. Read on to see why Five Below (FIVE 0.42%), Wayfair (W -2.74%), and Take-Two Interactive (TTWO -0.94%), which have all at least doubled in the last three years, might be just getting started.
1. Five Below
With the stock having soared over the last few years, you might think Five Below's best days are behind it. But the youth-focused retailer still has plenty of market-thumping growth ahead of it -- assuming management can keep capitalizing on the quickly shifting trends around its product niches.
Sales at existing locations are inching along at modest gains. Its 1% comps uptick last quarter, for example, looks weak compared to established giants like Walmart, which grew at twice that pace. Yet it's a testament to its flexible selling model that Five Below can keep expanding comps while raising prices and going up against tough year-ago comparisons with fidget-spinner sales. Those products aren't flying off the shelves anymore, but other products, like slime toys, are. That nimble approach helps explain why Five Below is on track to post its 14th straight year of positive comps.
Investors are also excited about the retailer's accelerating expansion plans. CEO Joel Anderson and his team are pushing toward their long-term goal of 2,500 locations -- up from around 900 today, meaning the company's annual sales should far surpass the current $1.6 billion mark in a few years.
Only a volatile stock like Wayfair could seem like a disappointment when shareholders are looking at an almost 200% increase in just three years. But that return was pushing 400% at one point in 2019 before worries about rising costs and slowing gains stalled the growth stock.
The e-commerce giant's last few earnings reports contained more good news about the business than bad, though. Sales growth has easily surpassed management's targets, with the most recent pace reaching 42%. Those market-share gains are coming despite restrained marketing spending and firm pricing, and they're supported by a rising customer base, higher spending per order, or an increasing percentage of repeat ordering.
Those positive metrics all support management's bullish outlook for the business that they see as eventually delivering sustainable profit margins of near 10% of sales. Sure, that profitable future is likely several years away, but investors can't fault Wayfair for pouring resources toward extending its market share lead into other countries given all the success it's had so far in the U.S.
3. Take-Two Interactive
Take-Two's smaller content portfolio has left it vulnerable to wild earnings swings in years that didn't include huge releases from franchises like Grand Theft Auto and Red Dead Redemption. But the video game developer appears to have neutralized that weakness here in the start of fiscal 2020.
Net bookings, a key sales growth metric, jumped 46% in the most recent quarter to over $420 million. Red Dead Redemption and GTA contributed to that growth, but so did Take-Two's NBA 2K and Borderlands franchises.
Yet one of the best reasons to like Take-Two is that its digital sales are expanding at a faster rate than the broader business, which points to continued profitability gains ahead. And while another global mega-hit like Grand Theft Auto would accelerate investors' returns, the company is showing how its steady growth pipeline can still deliver consistent gains.