3 Monster Stocks That Can Outperform the S&P 500: A Deep Dive
The S&P 500 has long been considered a reliable benchmark, averaging annualized returns of 10% over the past 50 years. However, for those looking to surpass this, picking the right growth stocks can make all the difference.
In this piece, we'll explore three promising companies that Motley Fool contributors believe can outperform the S&P 500 in the next five years: e.l.f. Beauty (NYSE: ELF), Dutch Bros (NYSE: BROS), and Celsius Holdings (NASDAQ: CELH). Here’s a closer look at why these stocks might be worth adding to your portfolio.
1. e.l.f. Beauty: A Fast-Growing Consumer Brand
John Ballard: e.l.f. Beauty has been a standout performer with shares surging 275% over the past three years. This remarkable growth can be attributed to the brand’s commitment to offering value in color cosmetics, enabling it to capture significant market share from industry giants.
Despite its success, the company still has considerable growth potential. A high inflation environment has actually strengthened e.l.f.’s value proposition, with sales jumping 50% in the fiscal first quarter of 2025. The company has risen to become the No. 2 mass brand in the U.S., holding a 12% market share, and there's room for expansion as international sales—currently at 16% of total revenue—grew by 91% year-over-year last quarter.
Moreover, e.l.f. Beauty recently announced a $500 million share repurchase program. While higher marketing investments might impact near-term earnings, the earnings are still expected to grow by 10% this year, accelerating to 26% in fiscal 2026. Given its global growth runway, e.l.f. Beauty is well-positioned to outperform the broader market.
2. Dutch Bros: Brewing More Than Just Coffee
Jennifer Saibil: Dutch Bros has carved out a unique space in the crowded coffee market. Initially a small-town coffee shop in Oregon, the company has expanded its footprint significantly, growing from 415 stores in 2020 to 912 by the end of Q2 2023. The company plans to reach 4,000 stores over the next 10 to 15 years, an ambitious target indicating rapid, continued expansion.
Sales growth has been impressive, with a 30% year-over-year increase in Q2. The introduction of digital ordering later this year should further enhance growth. Dutch Bros has managed to thrive without digital ordering until now, so its rollout could provide a significant boost. With its loyal customer base and expanding footprint, Dutch Bros is likely to continue its strong performance.
3. Celsius Holdings: Energy Drink with More Upside
Jeremy Bowman: Celsius Holdings was a pandemic darling, with its energy drink gaining massive popularity on Amazon. Despite some recent pullback—nearly 70% from its peak—due to concerns about growth and market maturity, the company’s long-term story remains compelling.
In Q2, Celsius posted a revenue increase of 23% to $402 million and improved its gross margin by 320 basis points to 52%. While the overall energy drink market shows signs of slowing, with Monster Beverage reporting just 6% growth, Celsius continues to gain market share, up 1.4 percentage points to 11% in Q2.
Although the days of triple-digit growth are likely behind it, Celsius is still well-positioned for steady gains, and the current stock price presents a good entry point for investors looking to capitalize on its future growth.
Conclusion: Should You Invest?
Before jumping into any of these stocks, it's crucial to consider the bigger picture and the company’s growth potential relative to market conditions. Motley Fool Stock Advisor, for instance, has a track record of identifying promising stocks, delivering returns that have quadrupled the S&P 500 since 2002.
As always, conducting your own research and consulting financial advisors can provide valuable guidance as you navigate the investing landscape. Happy investing!
