Investors put their hard-earned money in the stock market, with the only hope of getting reasonable returns. There are few stocks in the market that have the capacity of adding immense value to shareholders’ worth. Investors need to watch stock market signals very carefully to know when to invest in a stock. After all, it is just not investing in the right stock that is important, but it is about the timing of investment that is equally if not more important. Now let us look at some stocks that have performed quite well over some time and look like adding more to their investors’ worth.
Steady growth and expansions
When there are lots of fast food giants struggling to run their businesses in the highly challenging external environment like inflation and increased competition, there is one that has been growing at an absolutely remarkable rate. It is the Chipotle Mexican Grill (CMG, Financial) restaurant food chain. The restaurant that specialises in burritos has a bevy of customers lining at its stores because the management of CMG focuses on providing quality food, rather than focusing on cost cutting initiatives like most of CMG’s competitors.
This restaurant recorded an 80% increase in revenues in the period between 2011 and 2014. For the last year, however, growth rates have slowed down a bit. The year 2015 will be the year of consolidation for CMG as it is planning to take its total number of stores by around 190 to 205. One of the most important highlights of CMG is that it has a loyal customer base. CMG has created a name for itself in providing high quality food and it has immense potential to grow further in the coming years, thereby adding value to shareholders. The trend of share price movement of CMG for the last few months is seen below:
Travel sector looking promising
The next stock that is sure to add value to investors is Priceline Group (PCLN, Financial). This is one of the biggest names in the online travel booking business and enjoys immense reputation among its customers because of the quality and diversity of services that it provides. For the last 10 years, Priceline has delivered an average annual growth of 48%, which speaks volumes about the company’s success. Gross profit margins have increased by 89% and net margins by 29% in the last 10 years. In the last five years, Earnings per share have increased by a whopping 55%. Every year, the company generates $2.6 billion free cash flow.
In the last year, the travel industry had some challenges like falling economies of Europe and China, strengthening of US dollar and high inflations in most of the countries. A majority of Priceline’s business revenue comes from international markets; hence these challenges put the brakes on Priceline’s growth rates as well. With around 13% reduction in growth rates, Priceline’s share prices too came down and are currently trading at a discount. This is the perfect opportunity for investing in these stocks. The road ahead looks quite bright for Priceline due to many factors. For the last year, revenues from international markets grew by 30%. Priceline also adopted a couple of smart strategies like the following:
- Diversifying into other natures of business like travel packages, hotel bookings, cars for hire and restaurant booking &
- Acquisitions of Booking.com, Kayak.com and Open Table
These strategies will begin to bear fruit during this year, due to which Priceline’s share prices will shoot up, adding more value for shareholders. Stock movement of the company for the last few years is seen below:
Conclusion
Certain stocks have the ability to provide great returns to their shareholders on a consistent basis. These two stocks belong to that category. The industries that they belong to – fast foods & travel -are ones that keep continuously coming up with innovations and new business strategies. These companies too, are not the ones to lag behind. Over the years, they have managed to add value to their investors with new products and services. They will continue to do so; hence they are safe bets for investors who want to make quite a lot of bucks from the stock market.
