3 giant stocks that could crush the S&P 500 in the next 5 years

The S&P500 The index has averaged a 10% annual return over the past half-century, but outperforming that target is not difficult if you invest in a group of well-selected growth stocks.

To give you some ideas, Motley Fool’s team of contributors see promising prospects Elven beauty (NYSE:ELF), Dutch brothers (NYSE: BROS)AND Celsius Holdings (NASDAQ: CELH). Here’s why these stocks should deliver excellent returns.

It is one of the fastest growing consumer brands

John Ballard (elven beauty): elf Beauty shares are up 275% in the last three years. The company’s focus on providing valuable color cosmetics has enabled it to gain significant market share against industry leaders. The company still has enormous growth potential globally, but investors may be able to buy shares at a more reasonable valuation with share prices down more than 50% from their February high.

High inflation has strengthened the elf’s value proposition. In the first quarter of fiscal year 2025, which ended June 30, sales increased 50% compared to the prior-year quarter. It is currently the No. 2 mass brand in the U.S., with 12% market share, and management is working to expand the brand globally. International sales make up only 16% of the business, but grew an impressive 91% year-over-year last quarter.

elf Beauty has promising growth potential, and management sees value in the stock after the sell-off. The company recently announced a $500 million share repurchase program. The company’s shares fell on expectations that higher marketing investments would weigh on profits and margins in the near term. However, earnings are expected to grow 10% this year and then accelerate to 26% in fiscal 2026.

Given its huge runway in international markets, the stock is expected to outperform the broader market over the next five years and beyond.

Great coffee, growing sales

Jennifer Saibil (Dutch brothers): How to open a chain restaurant that basically sells coffee, but creates a message distinctive enough to be distinguished Starbucks and gain a huge fan base? Ask Dutch Bros. This small, down-to-earth coffee chain is growing rapidly, generating high sales growth and developing a growing base of loyal fans.

Dutch Bros has been around for decades as a small, local coffee chain in Oregon. After refining its image and culture and developing a line of popular drinks, it became a public company with big growth plans. So far, it has successfully entered new states on the West Coast and mostly Southern states, with the number of stores increasing from 415 in 2020 to 912 at the end of the second quarter. In 2023, it opened 159 stores and is taking advantage of the opportunity to open 4,000. stores over the next 10-15 years, which is a goal to accelerate expansion.

New stores mean higher sales. Sales growth was strong and consistent, reaching 30% year-over-year in the second quarter. Higher sales and more efficient operations drive profits, and net income sees a rising profit.

One of the important new features is digital ordering. Despite everyone’s seeming need to go digital, Dutch Bros has found great success without it. But now it has tested mobile ordering in some of its stores and is expected to launch by the end of the year. This guarantees further success. With popular drinks and culture, new stores and a digital launch, Dutch Bros should easily maintain strong growth for the foreseeable future.

Dutch Bros shares are up 38% over the past year, outperforming the market and could be the stock to crush the market over the next five years and beyond.

There are more benefits to this range of drinks

Jeremy Bowman (Celsius Holdings): Celsius Holdings was one of the biggest companies to survive the pandemic, with its shares soaring after the energy drink flare-up Amazon during the lockdown period.

Since the start of 2020, the company’s shares have risen more than 5,000% at one point before falling sharply in recent months on concerns about slowing growth, a maturing energy drink category and news that Pepsico overestimated Celsius’s inventory, meaning it overestimated demand after becoming a distribution partner.

Celsius shares are currently down almost 70% from this year’s high, but that creates a good buying opportunity for investors. While the company’s days of triple-digit percentage gains are likely over, the growth story is far from dead, and the company’s stock prices currently appear reasonable, with a price-to-earnings (P/E) ratio of 31.

In the second quarter, revenue increased 23% to $402 million and gross margin continued to expand, increasing from 320 basis points to 52%, demonstrating that the company is becoming more efficient, benefiting from freight optimization and lower costs materials.

Although there are signs that the overall energy drink category’s growth is slowing as the market leader Monster drink saw only 6% continued growth in the second quarter, Celsius continues to gain market share, with retail dollar share increasing 1.4 percentage points to 11% in the second quarter, while growth remains strong at the warehouse club level and Amazon.

The upshot is that after the recent pullback, Celsius looks oversold. Investors can benefit from this as the company still has a promising growth path ahead.

Should you invest $1,000 in Elf Beauty now?

Before you buy elf Beauty stock, consider this:

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Jennifer Saibil has no position in any of the companies mentioned. Jeremy Bowman has positions at Amazon and Starbucks. John Ballard holds positions at Dutch Bros. The Motley Fool ranks and recommends Amazon, Celsius, Monster Beverage, Starbucks and elf Beauty. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.