3 Stocks Poised to Outperform the S&P 500 in the Next 5 Years
A Deep Dive into e.l.f. Beauty, Dutch Bros, and Celsius Holdings
Investing in the stock market offers incredible opportunities to grow wealth over time. While the S&P 500 index has historically generated an average annualized return of around 10% over the past 50 years, selecting a few well-chosen growth stocks can often lead to significantly higher returns. In this post, we will explore three stocks—e.l.f. Beauty (NYSE: ELF), Dutch Bros (NYSE: BROS), and Celsius Holdings (NASDAQ: CELH)—that show promising potential for outperformance over the next five years.
e.l.f. Beauty: The Fastest-Growing Consumer Brand in Cosmetics
Unprecedented Market Share and Revenue Growth
John Ballard highlights the impressive performance of e.l.f. Beauty, a brand that has seen its shares rocket by a staggering 275% over the past three years. Known for its value-centric color cosmetics, e.l.f. Beauty has gained significant market share, even against well-established industry leaders. Despite recent stock price fluctuations—down more than 50% from its high in February—the company continues to demonstrate impressive growth metrics.
In its 2025 fiscal first quarter ending June 30, the company's sales surged by 50%, making it the No. 2 mass brand in the U.S. with a 12% market share. Notably, international sales, which currently compose only 16% of the total business, grew by an eye-catching 91% year over year.
e.l.f. Beauty is addressing current market skepticism by announcing a $500 million share repurchase program. While higher marketing investments are expected to impact earnings and margins in the short term, earnings are still projected to rise by 10% this year and accelerate to 26% in fiscal 2026. With substantial untapped potential in international markets, e.l.f. Beauty is poised to outperform the S&P 500 over the next half-decade and beyond.
Dutch Bros: Brewing Success Beyond Starbucks
Expanding Presence and Innovative Approaches
Jennifer Saibil sheds light on the meteoric rise of Dutch Bros, a coffee chain that has effectively differentiated itself from coffee giant Starbucks. Originally a local Oregon favorite, Dutch Bros has expanded its footprint dramatically, growing from 415 stores in 2020 to 912 by the end of Q2 2023. With plans to scale to 4,000 stores over the next 10-15 years, the company has set an ambitious trajectory for future growth.
Dutch Bros reported a 30% year-over-year sales growth in Q2, backed by efficient operations and a loyal customer base. The introduction of digital ordering, set to be fully operational by year-end, promises to further bolster growth. With its unique beverages, distinct culture, and aggressive expansion plans, Dutch Bros has the potential to sustain strong growth, outpacing broader market returns.
Celsius Holdings: Energizing the Market
Capturing Market Share Despite Volatility
Jeremy Bowman emphasizes the transformative journey of Celsius Holdings, an energy drink company that soared during the pandemic but has faced recent volatility. After peaking with more than a 5,000% gain from early 2020, the stock has seen a significant pullback due to slowing growth concerns and overstocking issues with distribution partner Pepsico.
Despite these short-term challenges, Celsius continues to show robust growth. In Q2, revenue grew by 23% to $402 million, with gross margins improving significantly. The company gained 1.4 percentage points in retail-dollar share in Q2, continuing its strong performance in warehouse clubs and online through platforms like Amazon.
Currently trading at a price-to-earnings (P/E) ratio of 31, Celsius Holdings appears undervalued given its growth potential. Investors may find this an opportune moment to invest as the company still has a promising runway for future growth.
Final Thoughts
Investing in growth stocks like e.l.f. Beauty, Dutch Bros, and Celsius Holdings can offer substantial returns, far exceeding the historical averages of the S&P 500. Each of these companies has unique strengths and growth strategies that make them compelling options for investors looking to outperform the market in the next five years.
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Disclaimer: The information provided in this blog post is for educational purposes only and does not constitute financial advice. Always conduct your own research or consult a financial advisor before making investment decisions.
