Past performance is not a guarantee of future results, but strong growth in cumulative earnings enhances the likelihood that companies will continue to do so, leading their share prices higher in the coming years.
The S&P 500 Index reported a nearly 41% growth rate (or about 8.2% per year) in its annual earnings (not inflation-adjusted) over the past five years, generating a nearly 51% rise in its share price to $3,120.18 at close on Tuesday.
Hence, investors may want to consider the following stocks that have grown their earnings per share by more than 41% over the past five years, topping the S&P 500 Index, which is the benchmark for U.S. markets.
Further, this search considers earnings per share without non-recurring items as it gives investors a reliable way to forecast future earnings growth.
These companies are expected to perform well over the next couple of years also by analysts who have released positive recommendation ratings ranging between overweight and buy. The overweight recommendation rating is for stocks expected to outperform either the overall market or their industries.
Here are some results of my search for stocks with market capitalizations over $5 billion.
Veeva Systems
Veeva Systems Inc (VEEV, Financial) has grown its trailing 12-month earnings per share without non-recurring items by 55.7% over the past five years, as illustrated in the chart below.
The Pleasanton, California-based provider of cloud-based software for worldwide clients operating in the life sciences industry closed at $152.24 per share on Tuesday for a market capitalization of $22.53 billion.
The stock has climbed nearly 74% so far this year and has outperformed the S&P 500 by 49.7%.
The company has a price-earnings ratio of 83.17 versus the industry median of 25.78 and a price-sales ratio of 24.75 compared to the industry median of 1.59.
Veeva Systems doesn’t pay a dividend.
Wall Street recommends an overweight rating for shares of the stock with an average target price of $175.85.
Vail Resorts
Vail Resorts Inc. (MTN, Financial) has grown its trailing 12-month earnings per share without non-recurring items by 52.6% over the past five years, as shown in the chart below.
The Broomfield, Colorado-based operator of mountain resorts and urban ski areas in the U.S. closed at $240.47 per share on Tuesday for a market capitalization of $9.71 billion.
The stock has risen 13.4% so far this year, but underperformed the S&P 500 by 11%.
The company has a price-earnings ratio of 33.09 versus the industry median of 18.58 and a price-sales ratio of 4.34 versus the industry median of 1.54.
Vail Resorts is returning a portion of its cumulative earnings to the shareholders in the form of quarterly dividends. Currently, the company pays a dividend of $1.76 per common share, generating a 2.9% forward dividend yield and 2.8% trailing 12-month dividend yield versus the S&P 500’s yield of 1.83% as of Nov. 19.
Also, Vail Resorts has continuously increased its dividend since 2013.
Wall Street issued an overweight recommendation rating for shares of Vail Resorts with an average target price of $259.64.
Norwegian Cruise Line Holdings
Norwegian Cruise Line Holdings Ltd. (NCLH, Financial) has recorded 46.4% growth in its trailing 12-month earnings per share without non-recurring items over the past five years, as illustrated in the chart below.
The Miami-based cruise line operator closed at $53.66 per share on Tuesday for a market capitalization of $11.42 billion.
The share price has climbed 26.62% so far this year, outperforming the S&P 500 by 2.3%.
The stock has a price-earnings ratio of 12.08 versus the industry median of 18.58 and a price-sales ratio of 1.83 compared to the industry median of 1.54.
Norwegian Cruise Line Holdings does not pay a dividend.
Wall Street issued a buy recommendation rating for shares of Norwegian Cruise Line with an average target price of $64.41.
Disclosure: I have no positions in any securities mentioned in this article.
Read more here:
- Newmont Goldcorp Is Poised to Outperform
- Home Depot Falls Sharply After Release of 3rd-Quarter Results
- 3 Under-the-Radar Stocks With Low Price-Book Ratios
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
