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Robust sales growth, margin expansion, and innovation lead to strong gains.
Investors are always on the hunt for stocks that deliver market-beating gains. Of course, finding big-time winners is much easier said than done, but investors can still deploy a basic framework that puts them on the path to reaping outsized returns.
But what drives market outperformance?
Let’s take a closer look at a few common traits among companies delivering outsized gains over the past year.
Robust Sales Growth
Sales growth is vital for a company’s shares to outperform, as it’s the foundation of generating profits. Strong revenue generation allows companies to achieve scaling efficiencies, generate continuous shareholder value, and many other clear benefits.
A clear-cut example of this has been Palantir (PLTR - Free Report) over the last year, whose shares have climbed more than 370% over the past year. The company’s sales growth has been driven by the AI frenzy, posting double-digit percentage revenue growth rates in ten consecutive periods.
Below is a chart illustrating Palantir’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Margin Expansion
Margin expansion pleases the market, essentially letting investors know that a company is extracting more value from each dollar of sales. It indicates that a company is operating more efficiently, with better cost controls and other operational processes driving improved financial health.
Netflix (NFLX - Free Report) has enjoyed notable margin expansion over recent periods, with shares up 180% over the last year. Netflix overall continues to fire on all cylinders, regularly crushing our consensus expectations as of late.
Below is a chart illustrating Netflix’s margins on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Innovation Keeps You Ahead
Innovation is crucial for a company to remain relevant, enabling it to maintain and expand its current market share. NVIDIA (NVDA - Free Report) is an obvious example of this favorable development, whose innovation within artificial intelligence (AI) GPUs has launched shares higher over the past several years.
Below is a chart illustrating NVIDIA’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
All investors look to reap outsized gains. When it comes to outperformance, robust sales growth, margin expansion, and innovation are all contributing factors.
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Seeking Outsized Gains? 3 Traits Outperfoming Stocks Possess
Key Takeaways
Investors are always on the hunt for stocks that deliver market-beating gains. Of course, finding big-time winners is much easier said than done, but investors can still deploy a basic framework that puts them on the path to reaping outsized returns.
But what drives market outperformance?
Let’s take a closer look at a few common traits among companies delivering outsized gains over the past year.
Robust Sales Growth
Sales growth is vital for a company’s shares to outperform, as it’s the foundation of generating profits. Strong revenue generation allows companies to achieve scaling efficiencies, generate continuous shareholder value, and many other clear benefits.
A clear-cut example of this has been Palantir (PLTR - Free Report) over the last year, whose shares have climbed more than 370% over the past year. The company’s sales growth has been driven by the AI frenzy, posting double-digit percentage revenue growth rates in ten consecutive periods.
Below is a chart illustrating Palantir’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Margin Expansion
Margin expansion pleases the market, essentially letting investors know that a company is extracting more value from each dollar of sales. It indicates that a company is operating more efficiently, with better cost controls and other operational processes driving improved financial health.
Netflix (NFLX - Free Report) has enjoyed notable margin expansion over recent periods, with shares up 180% over the last year. Netflix overall continues to fire on all cylinders, regularly crushing our consensus expectations as of late.
Below is a chart illustrating Netflix’s margins on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Innovation Keeps You Ahead
Innovation is crucial for a company to remain relevant, enabling it to maintain and expand its current market share. NVIDIA (NVDA - Free Report) is an obvious example of this favorable development, whose innovation within artificial intelligence (AI) GPUs has launched shares higher over the past several years.
Below is a chart illustrating NVIDIA’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
All investors look to reap outsized gains. When it comes to outperformance, robust sales growth, margin expansion, and innovation are all contributing factors.