Over the past five years, shares of Lululemon (LULU -0.03%) have soared 287% (as of the afternoon of Jan. 10), which quintupled what the broader S&P 500 returned. That's some incredible outperformance. And it's something that all investors are certainly trying to achieve with their own individual portfolios. 

Digging a bit deeper, it's clear there's one important reason for Lululemon's remarkable success. Let's take a closer look at what shareholders must know about this leading apparel stock. 

Taking a bigger piece of the pie 

The global sportswear market, according to data provided by Statista, is valued at $380 billion today. And it is forecast to be worth $455 billion in 2027. This translates to an annualized gain of just 3.7% for the overall industry. That's still a healthy advancement, but it isn't jaw-dropping growth. 

Lululemon, on the other hand, has boosted its top line at a compound annual rate of 21.7% between fiscal 2016 and fiscal 2021. And over the next five years, management expects annual revenue to jump to $12.5 billion. The company has some major growth pillars it can rely on, like continuing to focus on men's apparel, international expansion, and its digital channel. 

Right now, it's estimated that Lululemon commands only 2% of the global sportswear market (based on trailing-12-month revenue of $7.5 billion). If the leadership team, led by CEO Calvin McDonald, can achieve its five-year target, Lululemon's market share in 2027 will have climbed to just under 3%, or roughly a 40% increase. 

Undoubtedly, Lululemon's biggest rival is none other than Nike. The undisputed industry leader generated $49.1 billion in trailing-12-month sales, so its market share of 13% is certainly higher than Lululemon's today. However, Wall Street consensus analyst forecasts call for Nike's revenue to increase at a compound annual rate of just 8.1% over the next five fiscal years. While this will result in market share gains, it will pale in comparison to what Lululemon will be able to do. 

It's one thing to invest in companies that operate in industries exhibiting growth. It's even better to identify businesses that are increasing their sales at an even faster clip than the industry. This is what gaining market share is all about. In other words, it's taking a bigger piece of the pie. 

Investors can easily apply this analytical lens to other stocks they are looking at. Obviously, the first thing to make note of is how fast sales have increased for the specific company you're interested in. Then make a list of publicly traded competitors with financial statements that are easily attainable. This will allow you to compare sales data between major businesses in the industry. 

Finding estimates of the size of the total industry shouldn't be too difficult. Sometimes, these individual companies will mention the value of the market they operate in their SEC filings. If not, sources like Statista, or a simple Google search, can provide the necessary info. 

It's worth pointing out that investors should look at industry size estimates from multiple sources, where available, to ensure there aren't any huge discrepancies with the data. It's also critical to define the target industry as closely as possible. For example, in Lululemon's case, we are only focused on the activewear market, not the general apparel market, which is valued at more than $1.5 trillion globally. Clearly, this would seriously alter our market share calculations. 

Investing in the shares of companies that are exhibiting rapid revenue growth when compared to the rest of the industry is a smart strategy to improve portfolio returns over time.