2 Unstoppable Growth Stocks That Could Crush the S&P 500 in the Next 5 Years

THE S&P 500 The index has generated annualized returns of about 10% since 1957. That closely approximates the growth of the average company. gainsIf you want to beat the market, you need to look for companies that can grow their earnings well above average.

Here are two companies that can generate superior earnings growth and outperform the S&P 500 over the next five years.

1. Tesla

Tesla (NASDAQ: TSLA) The company’s stock has generated an 8,500% return for shareholders over the past 12 years, but the stock hasn’t hit new highs since 2021. However, the stock has followed this pattern before. Shares previously posted modest gains between 2014 and 2018 before increasing tenfold to their previous high of $414. Here’s why another bull run is coming.

Despite higher interest rates and Growing competition in the electric vehicle (EV) marketTesla reported a strong second quarter, with auto revenue up 14% from the first quarter. Tesla remains one of the most profitable automakers in the world, generating $8.1 billion in adjusted net income over the past four quarters on $95 billion in revenue.

Tesla will emerge from this crisis with a stronger competitive position thanks to its efforts to reduce costs per vehicle. The opportunity for electric vehicles remains enormous, with annual unit sales expected to more than double over the next four years, according to Statista. By reducing costs, Tesla will remain a formidable leader capable of profitably selling more affordable electric vehicles to capture a significant share of the market.

CEO Elon Musk has previously said he believes Tesla could one day make $1 trillion in profits. That’s a very long-term goal, but it shows that management is increasingly investing in initiatives that will boost the company’s margins and drive strong earnings growth over time. Some of these opportunities are expected to come to fruition over the next five years, such as increasing subscriptions to Tesla’s self-driving software, energy solutions, and robotaxi service.

Analysts expect Tesla’s profits to nearly double next year, which could be the start of a trend. As auto revenue returns to growth and Tesla continues to improve its profit margin, the company can generate double-digit earnings growth to support market-beating returns.

2. Spotify Technology

Spotify Technology (NYSE: SPOT) The company’s shares have risen 128% over the past 12 months, driven by growing demand for its premium subscription plans. The company is maximizing profits by releasing more content and raising prices, and those actions could generate above-market returns for shareholders.

Few services are posting double-digit revenue growth in this challenging retail environment. But music and podcast listeners clearly value their monthly Spotify subscription. Spotify’s total monthly active users increased 14% year over year in the second quarter to 626 million.

Spotify dominates audio market as it expands into audiobooks and podcasts. Premium subscribers grew 12% year-over-year…