These days, it's not enough for investors to focus on stocks that have been delivering explosive growth. This type of growth may be transitory and the company may not be able to keep it up.
Therefore, it's wiser to select businesses that have displayed steady track records of growing their top and bottom lines over several years. What's more, you should seek companies that possess catalysts or tailwinds that could sustain further growth.
Remember that consistent, long-term growth will eventually lead to a higher share price, earning you significant capital gains over the long run. These are the types of businesses you'd want to own forever as they can help you to compound your money many times over. Companies with reputable brands along with a solid market position are better placed to leverage these strengths to post continuous growth.
These three stocks possess all of those characteristics.
Image source: Getty images.
Monster Beverage
Monster Beverage (MNST -0.68%) is famous for its signature energy drinks that come in a variety of brands and flavors. What investors may not know is that the company also delivered tantalizing returns over the years. From 2019 to 2021, its net sales rose from $4.2 billion to $5.5 billion while net income climbed from $1.1 billion to $1.38 billion.
Demand held firm even through the pandemic, when Monster Beverage faced supply chain disruptions and heightened costs for raw materials. In 2019, 2020, and 2021, its generated consistent free cash flow averaging $1.1 billion annually.
That momentum carried over into the first half of 2022, with revenue climbing 17.3% year over year to $3.2 billion. Net income, however, fell by 21.1% year over year to $567.6 million due to higher raw material costs amid supply chain snarls and soaring inflation. Monster Beverage increased prices in the U.S. on Sept. 1, and some international markets have also seen price increases in the second half.
In January, the company acquired CANarchy Craft Brewery, which is giving it an additional revenue stream from the alcoholic beverage segment. The higher costs are temporary issues that Monster Beverage should overcome by next year, and investors should be confident that the company can leverage its strong brands and portfolio of products to generate further growth.
Accenture
Accenture (ACN 0.43%) provides consulting services to a wide range of clients in more than 40 industries. The professional services firm has a stellar reputation, and around 80% of its revenue came from the U.S. and Europe in fiscal 2022, which ended Aug 31. Revenue in all three of its geographical markets rose between 23% and 29% year over year, demonstrating how the company continued to grow through the pandemic. Its revenue increased from $44.3 billion in its fiscal 2020 to $61.6 billion in fiscal 2022, while net income rose from $5.1 billion to $6.9 billion.
Accenture also set a few records in the recently ended fiscal year, with free cash flow hitting an all-time high of $8.8 billion and new bookings coming in at $71.7 billion. These numbers reflect Accenture's continued popularity among clients, and the business generated a high return on invested capital of between 30% and 33% over the past two years.
Not only will Accenture shareholders enjoy high returns coupled with steady growth, they will also get a quarterly dividend. The board recently hiked the payout by 15% to $1.12 per share and also approved additional share repurchases, cementing the stock as a great one for both growth and yield. Accenture boasts a 99% client retention rate among its top 100 clients. This strong loyalty should inspire confidence among investors that the company can continue to deliver in the future.
Match Group
When it comes to dating apps, few companies come close to matching up against Match Group (MTCH -5.36%). It owns some of the most popular apps such as Tinder, Hinge, OkCupid, and Meetic.
Revenue has steadily increased, coming in at $2.05 billion in 2019 and improving to $2.98 billion by 2021. Its operating income rose in tandem from $645.5 million to $851.7 million, but net income was clipped by one-off items such as a $441 million lawsuit settlement in 2021. These accounting adjustments, fortunately, had no impact on Match Group's free cash flow. From 2019 to 2021, the company generated an average annual free cash flow of $729.2 million.
Match Group continued to chalk up higher revenue for the first half of 2022, with revenue increasing by 15.8% year over year to $1.59 billion.
Both operating and net income, however, were impacted by a $217 million impairment loss relating to the company's acquisition of Hyperconnect. Excluding this adjustment, operating and net income would have increased by 3.9% and 15.9% year over year, respectively.
Encouragingly, the number of paying customers using Match Group's portfolio of dating apps steadily increased over the years -- from 11.9 million in 2019 to 15.5 million in 2021. It jumped further to 16.4 million as of the end of 2022's first half.
But management sees a significant runway for growth as more than half the singles in developed markets have yet to try dating apps, while emerging markets have even higher proportions of singles that have not tried such apps due to social stigma. Match Group has a great opportunity to expand its user base globally, and such statistics offer the possibility of many more years of growth.
