Stocks that outperform the market usually share key traits such as rising sales, expanding margins, and increasing returns on capital. The select few that can do all three for many years are often the ones that make you life-changing money.
It’s clear there’s a strong connection between sustained earnings growth and hall-of-fame returns. Keeping that in mind, here are three market-beating stocks that deserve a spot on your list.
KLA Corporation (KLAC)
Five-Year Return: +330%
Formed by the 1997 merger of the two leading semiconductor yield management companies, KLA Corporation (NASDAQ: KLAC) is the leading supplier of equipment used to measure and inspect semiconductor chips.
Why Do We Love KLAC?
- Annual revenue growth of 14.4% over the past five years was outstanding, reflecting market share gains this cycle
- Excellent operating margin of 40.6% highlights the efficiency of its business model, and its rise over the last five years was fueled by some leverage on its fixed costs
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
KLA Corporation’s stock price of $147.44 implies a valuation ratio of 29.7x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
Lam Research (LRCX)
Five-Year Return: +314%
Founded in 1980 by David Lam, the man who pioneered semiconductor etching technology, Lam Research (NASDAQ: LRCX) is one of the leading providers of wafer fabrication equipment used to make semiconductors.
Why Are We Bullish on LRCX?
- Market share has increased this cycle as its 29.5% annual revenue growth over the last two years was exceptional
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 35.3%, and its operating leverage amplified its profits over the last five years
- ROIC punches in at 65.8%, illustrating management’s expertise in identifying profitable investments, and its returns are climbing as it finds even more attractive growth opportunities
At $228.48 per share, Lam Research trades at 25.4x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
United Rentals (URI)
Five-Year Return: +201%
Owning the largest rental fleet in the world, United Rentals (NYSE: URI) provides equipment rental and related services to construction, industrial, and infrastructure industries.
Why Are We Positive on URI?
- Annual revenue growth of 13.7% over the last five years was superb and indicates its market share increased during this cycle
- Healthy operating margin of 26.2% shows it’s a well-run company with efficient processes
- Share repurchases over the last five years enabled its annual earnings per share growth of 20% to outpace its revenue gains
United Rentals is trading at $1,103 per share, or 18.4x forward P/E. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
High-quality stocks for all market conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.
