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3 Market-Beating Stocks with Competitive Advantages

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Companies that consistently increase their sales, margins, or returns on capital are usually rewarded with the best returns, and those that can do all three for years on end are almost always the legendary stocks that return 100 times your money.

The bottom line is that over the long term, earnings growth goes hand in hand with the biggest winners. Taking that into account, here are three market-beating stocks that deserve a spot on your list.

Cloudflare (NET)

Five-Year Return: +357%

Founded by two grad students of Harvard Business School, Cloudflare (NYSE: NET) is a software-as-a-service platform that helps improve the security, reliability, and loading times of internet applications.

Why Is NET a Top Pick?

  1. Billings growth has averaged 25.8% over the last year, indicating a healthy pipeline of new contracts that should drive future revenue increases
  2. Market share will likely rise over the next 12 months as its expected revenue growth of 25.5% is robust
  3. Well-designed software integrates seamlessly with other workflows, enabling swift payback periods on marketing expenses and customer growth at scale

At $110.01 per share, Cloudflare trades at 19.6x forward price-to-sales. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Monolithic Power Systems (MPWR)

Five-Year Return: +256%

Founded in 1997 by its longtime CEO Michael Hsing, Monolithic Power Systems (NASDAQ: MPWR) is an analog and mixed signal chipmaker that specializes in power management chips meant to minimize total energy consumption.

Why Are We Bullish on MPWR?

  1. Market share has increased this cycle as its 10.9% annual revenue growth over the last two years was exceptional
  2. Strong free cash flow margin of 30.4% enables it to reinvest or return capital consistently, and its recently improved profitability means it has even more resources to invest or distribute
  3. Industry-leading 46.6% return on capital demonstrates management’s skill in finding high-return investments

Monolithic Power Systems’s stock price of $546.50 implies a valuation ratio of 35.4x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.

United Parks & Resorts (PRKS)

Five-Year Return: +392%

Parent company of SeaWorld and home of the world-famous Shamu, United Parks & Resorts (NYSE: PRKS) is a theme park chain featuring marine life, live entertainment, roller coasters, and waterparks.

Why Do We Like PRKS?

  1. Disciplined cost controls and effective management resulted in a strong two-year operating margin of 26.7%
  2. Share repurchases over the last five years enabled its annual earnings per share growth of 24.3% to outpace its revenue gains
  3. Returns on capital are growing as management capitalizes on its market opportunities

United Parks & Resorts is trading at $44.56 per share, or 9.8x forward price-to-earnings. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.

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