Individual investors have access to a nearly infinite amount of market data coupled with a never-ending stream of forecasts and opinions from financial pundits. Trying to comprehend it all in order to make informed investing decisions can be deeply confusing. However, I'm here to tell you that there is an easy-to-use filter that you can implement to help you beat the market.

In most areas of our lives, it's fruitful to keep things as simple as possible. This isn't laziness -- it's a recognition that positive outcomes are often based on a few very important variables. The concept can be applied to picking stocks, and in that vein, investors would do well to follow one obvious rule above all others: Simply invest in businesses that sell outstanding products and services. 

Let's look at three great examples of companies that have outperformed the stock market by delighting their customers.

green and red arrows sitting on top of one dollar bill

Image source: Getty Images.

Costco Wholesale

With 803 warehouse stores and 107.1 million members in 59.1 million households worldwide, Costco Wholesale (NASDAQ:COST) has a loyal and passionate customer base that allowed it to generate $163.2 billion in sales in its fiscal 2020, which ended Aug. 30.

The company's business model is to sell an extensive number of products in a wide range of categories at competitive prices. Its massive size allows it to purchase inventory at extremely favorable prices and pass its savings along to shoppers. But what makes the entire experience superior is the treasure-hunt atmosphere. Because the stores consistently offer up surprise deals and varied merchandise, shoppers are incentivized to visit often and spend time browsing. This value proposition has resulted in a 91% membership renewal rate in the U.S. and Canada and 88% worldwide. 

Costco's stock has produced annualized returns of 19.7% over the past five years. And investors can be confident that many years from now, Costco will still be giving its customers low prices, a broad selection of everyday products, and an overall great shopping experience. 

Netflix

Netflix (NASDAQ:NFLX) pioneered the streaming video industry, and the rise of this new entertainment segment has in turn led to the widespread trend of cord-cutting. For $13.99 a month, Netflix viewers have the ability to watch billions of dollars worth of series, movies, and documentaries whenever and wherever they want. And the amount of options available to subscribers only grows -- the company spent $13.9 billion on content in 2019 alone.

Netflix has demonstrated incredible pricing power over the years, with the incremental revenue it generates being reinvested back into improving the product. The company's average revenue per user (ARPU) went from $7.85 in 2016 to $10.99 in its most recent quarter. "We'll occasionally go back and ask those members to pay a little bit more to keep that virtuous cycle of investment and value creation going," co-founder and co-CEO Reed Hastings said during the Q3 earnings call. 

Since the beginning of 2016, Netflix's stock has soared at an annualized rate of 37.5% per year. It absolutely crushed the market by innovating the media space and making video consumption more user-friendly, entertaining, and convenient. 

Peloton Interactive

The coronavirus pandemic presented Peloton Interactive (NASDAQ:PTON) with the opportunity to truly shine. The company's already popular connected fitness equipment became even more valuable when gyms were closed and people stuck at home began looking for other ways to work out. Revenue in its fiscal first quarter (which ended Sept. 30) skyrocketed 232% year over year, and management is forecasting that it will end fiscal 2021 with nearly 2.2 million connected fitness subscribers. 

What separates Peloton's products from the stationary bikes and treadmills collecting dust in so many basements is the dynamic software powering everything. The company's management is laser-focused on finding ways to enhance that technology, from signing partnerships with superstars like Beyonce to expanding its workout library, which now includes barre classes. 

Peloton's model of adding social, competitive, and fun elements to working out at home has propelled its stock upward by more than 525% since its September 2019 IPO. The business certainly received a solid boost from the pandemic, but based on the long wait times for delivery of its exercise equipment, it will likely keep humming along even after the crisis abates. 

Always keep this in mind

The gains that Costco, Netflix, and Peloton have delivered for shareholders demonstrate that investing in companies selling fantastic products and services can be a winning strategy. Investors would benefit greatly by utilizing a consumer's perspective when attempting to identify stocks to add to their portfolios. 

These businesses are known to focus relentlessly on upgrading their offerings with the goal of keeping customers happy and excited. Providing a better value proposition than rivals is a huge competitive advantage. Picking these types of companies for your portfolio and holding them for the long term will raise your odds of beating the stock market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.