In this article, we will take a look at the 13 stocks that outperform the S&P 500 every year for the last 5 years. To skip our analysis of the recent trends, and market activity, you can go directly to see the 5 Stocks That Outperform the S&P 500 Every Year for the Last 5 Years.
The stock markets have been through the wringer in the recent past following the coronavirus pandemic and the Russia-Ukraine conflict. Supply chain disruptions and other issues caused by these major events in the global arena led to inflationary pressures across the world which demanded strong monetary policy measures from governments. Rising interest rates put a dampener on the stock markets which led to one of the worst years in 2022 for the equity markets since 2008.
Of the three major U.S. stock indices, NASDAQ 100 fared the worst, declining more than 30% in 2022 as shareholders withdrew from growth firms due to escalating fears of a recession. S&P 500 fared better than the NASDAQ-100 but still went down more than 19% in 2022. You can read more about this and the market recovery in the first half of 2023 in our earlier article: 13 best most active stocks to buy now, published in July.
Optimism about a positive macroeconomic environment in the near future has resurfaced after the recent inflation reports which have shown better than expected results of the Fed’s monetary policies. Following the latest U.S. inflation report, stock markets rallied, followed by slight moderation. Investors expect the Federal Reserve to maintain interest rates at the same level in the upcoming meeting in December, followed by significant interest rate cuts by the end of 2024.
The stocks on our list have managed to post better results than the S&P 500 Index, a proxy for the U.S. stock market, for 5 consecutive years which speaks highly about their respective management's ability to perform better than the market. Investing in stocks for long-term is one of the best ways to grow wealth at relatively lower risk. You can read more about this in our recent article: 12 Best Performing S&P 500 Stocks in the Last 10 Years
Our list of 13 stocks that outperform the S&P 500 every year for the last 5 years includes companies from a diverse range of sectors with the technology sector accounting for the biggest proportion of stocks, followed by the industrials sector. The list includes companies such as DexCom, Inc. (NASDAQ:DXCM), Linde plc (NYSE:LIN), Arthur J. Gallagher & Co. (NYSE:AJG), Cadence Design Systems, Inc. (NASDAQ:CDNS), and Synopsys, Inc. (NASDAQ:SNPS), among others.
Stocks That Outperform the S&P 500 Every Year for the Last 5 Years
Photo by AlphaTradeZone
Methodology
We first identified the stocks trading on the NYSE and NASDAQ with market capitalizations of more than $2 billion. Then we shortlisted stocks with annual returns in excess of the S&P 500 returns for the last 5 years (each). We retained stocks with average analyst ratings of Buy or better and ranked the remaining stocks on our list based on their 5 year returns. Our list of 13 stocks that outperform the S&P 500 every year for the last 5 years contains top 13 stocks based on their aggregate 5 year returns as of November 16.
Stocks That Outperform the S&P 500 Every Year for the Last 5 Years
5-Year Share Price Returns as of November 16: 158%
Number of Hedge Fund Holders: 70
Woking, England-based Linde plc (NYSE:LIN) is a leading industrial gas company that provides atmospheric gases (oxygen, nitrogen, argon, and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene etc.) to a wide range of customers. It also designs and builds equipment that produces industrial gases and offers related services as well.
On October 23, the board of directors of Linde plc (NYSE:LIN) declared a quarterly dividend of $1.275 per share which translated into a dividend yield of 1.27% based on the share price on November 16. The Board also approved a new share repurchase program for up to $15 billion of the company’s shares which brings total share buyback authorization to $17 billion.
As of Q2 2023, Linde plc (NYSE:LIN) shares were held by 70 of the 910 hedge funds tracked by Insider Monkey, valued at $4.6 billion. This makes Linde plc (NYSE:LIN) the most commonly owned stock by hedge funds on our list of 13 stocks that outperform the S&P 500 every year for the last 5 years.
5-Year Share Price Returns as of November 16: 159%
Number of Hedge Fund Holders: 28
Based in Rutland, Vermont, Casella Waste Systems, Inc. (NASDAQ:CWST) provides solid waste collection and disposal, transfer, recycling, and organics services in the eastern United States to residential, commercial, municipal, institutional, and industrial customers.
On July 3, Casella Waste Systems, Inc. (NASDAQ:CWST) announced the acquisition of the Pennsylvania, Delaware, and Maryland collection, transfer, and recycling operations of GFL Environmental Inc. for a purchase price of $525 million. Later on, on September 5, the company completed the acquisition of Consolidated Waste Services, LLC assets for $219 million. The acquired assets are expected to generate aggregate annualized revenues of $185 million and $70 million, respectively.
Casella Waste Systems, Inc. (NASDAQ:CWST) raised gross proceeds of $517.5 million from a public offering of shares of its Class A common stock in June this year. The company sold 6.05 million shares at a public offering price of $85.50 per share, before offering discounts.
5-Year Share Price Returns as of November 16: 203%
Number of Hedge Fund Holders: 58
San Diego, California-based DexCom, Inc. (NASDAQ:DXCM) is a medical devices company developing and marketing Continuous Glucose Monitoring (CGM) systems for ambulatory use by people with diabetes and by healthcare providers for the treatment of people with diabetes.
On October 26, DexCom, Inc. (NASDAQ:DXCM) released its financial results for Q3 2023. Its revenue increased by 27% y-o-y to $975 million, while net income increased by 19% y-o-y to $121 million. The company also announced a $500 million share repurchase program.
DexCom, Inc. (NASDAQ:DXCM) and Medpace Holdings, Inc. (NASDAQ:MEDP) are the only two healthcare sector companies that have made it onto our list of 13 stocks that outperform the S&P 500 every year for the last 5 years. The shares of DexCom, Inc. (NASDAQ:DXCM) were owned by 58 prominent hedge funds as of June 30, with the aggregate shares held by these hedge funds valued at $2.0 billion.
In its Q3 2023 “Baron Health Care Fund” investor letter, Baron Funds, an investment management company, made the following comments about DexCom, Inc. (NASDAQ:DXCM):
“DexCom, Inc. is a leading provider of continuous glucose monitoring technology (CGM) for people with diabetes. The stock declined after Novo Nordisk released SELECT trial results. The trial results have led to investor concerns that Wegovy and medications in the same class (Ozempic, Mounjaro, and other drugs in development) may be broadly reimbursed by payors and widely adopted. This has raised questions about the long-term impact of GLP-1 drugs on the size of DexCom’s addressable market and the terminal value of the stock as these new medications could slow the progression of diabetes for those who are pre-diabetic and reduce the need for insulin for those with Type 2 diabetes. We think GLP-1 drugs will be used in conjunction with CGM technology, which will remain a critical diabetes management tool. We continue to believe DexCom has an attractive long-term growth runway ahead.”
5-Year Share Price Returns as of November 16: 213%
Number of Hedge Fund Holders: 35
Rolling Meadows, Illinois-based Arthur J. Gallagher & Co. (NYSE:AJG) a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Illinois. It provides these services in approximately 130 countries around the world.
Arthur J. Gallagher & Co. (NYSE:AJG) has been on an acquisition spree with several agreements or acquisitions announced recently. So far in November, the company has acquired or agreed to acquire 5 companies or business units for undisclosed amounts. Earlier in October, the company completed the acquisition of Natick, Massachusetts-based Eastern Insurance Group, LLC for nearly $510 million, and agreed to acquire Cadence Insurance, Inc. (Cadence Insurance), a wholly owned subsidiary of Cadence Bank (NYSE:CADE) for $749 million.
As of Q2 2023, Arthur J. Gallagher & Co. (NYSE:AJG) shares were owned by 35 hedge funds with a total value of $774 million. Andreas Halvorsen’s Viking Global was the biggest hedge fund shareholder with ownership of 0.8 million shares valued at $181 million.
5-Year Share Price Returns as of November 16: 221%
Number of Hedge Fund Holders: 45
Broomfield, Colorado-based, Crocs, Inc. (NASDAQ:CROX) is a world leader in innovative casual footwear for women, men, and children. Its brands include Crocs and HEYDUDE and its products are sold in more than 85 countries through wholesale and direct-to-consumer channels.
On November 3, Baird analyst Jonathan Komp lowered the price target on Crocs, Inc. (NASDAQ:CROX) shares to $155 from $185 and maintained an ‘Outperform’ rating for the shares. This represents a potential upside of 72.07% based on the share price on November 16.
As of Q2 2023, Crocs, Inc. (NASDAQ:CROX) shares was held by 45 hedge funds, with the total shares held by these funds valued at $1.3 billion. Among hedge funds, Marshall Wace LLP held the most shares of the company with ownership of 2.1 million shares valued at $236 million.
Voss Capital, an investment management firm, made the following comment about Crocs, Inc. (NASDAQ:CROX) in its Q2 2023 investor letter:
“Concerns persist around the sustainability of core Crocs brand popularity, which we believe are unwarranted, as the brand continues to grow at a double-digit rate with expanding margins. Near term concerns around HeyDude inventory issues are warranted but the company has been taking steps to correct them and any short-term weakness here is more than offset by the surprise strength of the core Crocs brand which accounts for over three-fourths of the company’s revenue and an even higher percentage of the company’s gross profit. With a growing FCF stream at a current 15% yield and a buyback authorization in place for ~20% of the shares outstanding at current market prices, combined with a ~10% short interest, we think CROX's forward return prospects are still asymmetrically skewed to the upside from the recent market price of $80.”
5-Year Share Price Returns as of November 16: 247%
Number of Hedge Fund Holders: 21
Montreal, Quebec-based TFI International Inc. (NYSE:TFII) is a transport and logistics company operating primarily in Canada, the United States, and Mexico through 4 business segments: less than truckload, package and courier, logistics, and truckload.
On September 5, TFI International Inc. (NYSE:TFII) announced the acquisition of Abbotsford, British Columbia-based Vedder Transportation Group, which specializes in the tank truck transport of food grade liquids and dry bulk commodities. Earlier on August 16, the company completed the acquisition of JHT Holdings, Inc., a leading asset light logistics and transportation provider in North America for Class 6-8 truck manufacturers.
As of Q2 2023, TFI International Inc. (NYSE:TFII) shares were owned by 21 of the 910 hedge funds tracked by Insider Monkey, valued at $157 million. Arrowstreet Capital, D E Shaw, and Scopus Asset Management were the top 3 hedge fund shareholders of the company.
5-Year Share Price Returns as of November 16: 284%
Number of Hedge Fund Holders: 19
SPS Commerce, Inc. (NASDAQ:SPSC), based in Minneapolis, Minnesota, is a technology company providing a leading retail network, connecting trading partners around the globe to optimize supply chain operations. It provides integration and comprehensive retail performance analytics to thousands of customers worldwide.
On October 26, SPS Commerce, Inc. (NASDAQ:SPSC) released its financial results for Q3 2023. Its revenue increased by 18% y-o-y to $136 million, while it generated a net income of $17 million. At $0.75, normalized EPS for the quarter surpassed consensus estimates by $0.08.
Following the earnings release, Northland Capital Markets analyst Nehal Chokshi raised the price target on SPS Commerce, Inc. (NASDAQ:SPSC) shares to $177 from $175 and upgraded the rating from ‘Market Perform’ to ‘Outperform’.
5-Year Share Price Returns as of November 16: 346%
Number of Hedge Fund Holders: 36
Axon Enterprise, Inc. (NASDAQ:AXON), based in Scottsdale, Arizona, is a leading technology company focused on public safety. Formerly known as TASER International, the company offers TASER energy devices, body cameras, in-car cameras, cloud-hosted digital evidence management solutions, productivity software and real-time operations capabilities.
On November 7, Axon Enterprise, Inc. (NASDAQ:AXON) released its financial results for Q3 2023. Its net revenue increased by 33% y-o-y to $414 million, while net income surged 390% y-o-y to $59 million. The company exceeded consensus estimates for normalized EPS by $0.26 with an EPS of $1.02 for the quarter.
Following the earnings release, Raymond James analyst Brian Gesuale raised the price target for Axon Enterprise, Inc. (NASDAQ:AXON) to $233 from $223 and maintained an ‘Outperform’ rating.
