Many stocks have collapsed this year as inflation, rising interest rates and other macro headwinds have pushed investors to more conservative investments. As such, it’s hard to find stocks that consistently outperform the S&P 500 and generate positive returns.
However, if we look further back over the past 10 years, we see that some well-known stocks have consistently outperformed — and will likely continue to do so for the next decade.Let’s take a look at three stocks that fit that profile: Hermès International (He says -2.17%)Costco Wholesale (cost 1.33%)and dollar generals (Dangerous Goods -0.78%).
1. Hermes International
Hermès is both a growth investment and a recession-resistant investment. Between 2011 and 2021, the French mansion’s revenue grew from €2.84 billion to €8.98 billion ($9.06 billion), a compound annual growth rate (CAGR) of 12%. Its net income also grew at a compound annual growth rate of 15 percent, from EUR 594 million to EUR 2.45 billion ($2.48 billion).
Regardless of macroeconomic conditions, Hermès continues to thrive as it primarily serves affluent clients who are well-positioned to recession. It also makes most of its products in small workshops in France, rather than mass-producing it overseas. This approach protects it from supply chain disruptions and enhances its luxury appeal through brand-building craftsmanship and a sense of scarcity.
Shares of Hermès have surged nearly 300% over the past decade as the S&P 500 has risen about 190%. The stock is currently trading at 42 times forward earnings, which is not cheap, but I believe Hermès stock will continue to command a premium valuation if a recession begins, as its core customers will continue to buy its expensive leather goods, accessories, watches, Fragrances, and beauty products, as less affluent customers control their spending.
2. Costco Wholesale
Costco is another evergreen stock that offers long-term growth and plenty of downside protection during a recession. Costco’s approach is simple: sell cheaper products in bulk, lock in shoppers with sticky annual subscriptions, and keep opening new stores in the U.S. and overseas.
Costco’s revenue rose from $87.1 billion to $192.1 billion between fiscal 2011 and fiscal 2021, which ended last August, at a compound annual growth rate of 8 percent. Its net income — mainly from higher-margin membership fees — grew at a compound annual growth rate of 13%, from $1.46 billion to $5.01 billion.
Costco ended its most recent quarter with 830 warehouse stores worldwide, compared with 592 at the end of fiscal 2011, making it one of the few retailers to have expanded its brick-and-mortar presence over the past decade. cut the expenses.
Costco has performed well throughout the pandemic as shoppers stock up on more packaged food and household products, and it will likely remain the shopping destination of choice as inflation pushes consumers to buy more in bulk. Costco’s stock has risen about 430% over the past 10 years — and its forward price-to-earnings ratio of 34 is certainly not cheap — but I believe it will continue to outperform the market for years to come.
3. Dollar General
Dollar General, one of the largest “dollar store” chains in the U.S., no longer sells everything for a dollar, but it still sells most of its products for less than Amazon or Walmart. Unlike rival Dollar Tree, which primarily serves urban and suburban areas, Dollar General primarily targets rural areas that are underserved by large retailers.
Dollar General’s business model is simple, with revenue steadily growing from $14.8 billion in 2011 to $34.2 billion in 2021, a compound annual growth rate of 9%. Net income grew 12% from $767 million to $2.4 billion.
Like Costco, Dollar General has continued to open new stores as other brick-and-mortar retailers retreat. It ended its most recent quarter with 18,356 U.S. locations, up from 9,937 at the end of 2011.
Dollar General has also weathered macro headwinds well, as it attracts bargain shoppers during a downturn. That’s why its stock has outperformed the market with a staggering gain of nearly 430% over the past 10 years. At just 21 times forward earnings today, the stock still has plenty of room to run in future bear and bull markets.
John Mackey, chief executive of Amazon subsidiary Whole Foods Market, sits on The Motley Fool’s board. Leo Sun has positions at Amazon and HERMES INTL SA. Motley Fool has jobs and referrals at Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.