3 Market-Beating Stocks with Solid Fundamentals

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.

Long story short, there is a near-perfect correlation between consistent earnings growth and huge winners. Taking that into account, here are three market-beating stocks that deserve a spot on your list.

Philip Morris (PM)

Five-Year Return: +153%

Founded in 1847, Philip Morris International (NYSE:PM) manufactures and sells a wide range of tobacco and nicotine-containing products, including cigarettes, heated tobacco products, and oral nicotine pouches.

Why Should You Buy PM?

1. Average unit sales growth of 3% over the past two years reflects steady demand for its products
2. Unique products and pricing power lead to a best-in-class gross margin of 64.8%
3. Strong free cash flow margin of 25.7% enables it to reinvest or return capital consistently, and its rising cash conversion increases its margin of safety

Philip Morris’s stock price of $182.30 implies a valuation ratio of 24.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

ITT (ITT)

Five-Year Return: +172%

Playing a crucial role in the development of the first transatlantic television transmission in 1956, ITT (NYSE:ITT) provides motion and fluid handling equipment for various industries

Why Is ITT on Our Radar?

1. Operating margin expanded by 9.6 percentage points over the last five years as it scaled and became more efficient
2. Share repurchases have increased shareholder returns as its annual earnings per share growth of 13.9% exceeded its revenue gains over the last two years
3. Industry-leading 17.5% return on capital demonstrates management’s skill in finding high-return investments, and its rising returns show it’s making even more lucrative bets

At $150.66 per share, ITT trades at 23.1x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.

ESCO (ESE)

Five-Year Return: +121%

A developer of the communication systems used in the Batmobile of “The Dark Knight,” ESCO (NYSE:ESE) is a provider of engineered components for the aerospace, defense, and utility sectors.

Why Do We Like ESE?

1. Demand for the next 12 months is expected to accelerate above its two-year trend as Wall Street forecasts robust revenue growth of 18.2%
2. Offerings are difficult to replicate at scale and result in a stellar gross margin of 38.9%
3. Earnings per share grew by 20.7% annually over the last two years and trumped its peers

ESCO is trading at $182.31 per share, or 29.4x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.

High-Quality Stocks for All Market Conditions

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio 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 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today