It’s not every day when a stock generates triple-digit returns. Some investors dig through hundreds of stocks to discover which ones have the potential to deliver triple-digit returns. It takes a lot of research to find stocks with that type of potential, but even then, not all of them live up to expectations.
Investors should look for several characteristics when they analyze growth stocks. Rising revenue is a must. If a company isn’t growing, there’s no reason to expect its stock price to magically grow. Rising profit margins is another key element. Some corporations deliver exceptional sales growth but burn through a lot of money. Unprofitable companies are unsustainable in the long run and need to become profitable in the near future.
Finally, investors should assess each company’s growth opportunities. Was a strong quarter from last year a fluke, or is the company for real? These factors, combined with peeking at the company’s valuation, can increase the likelihood of finding stocks poised for triple-digit returns. These picks look promising.
Consolidated Water Co. (CWCO)
Consolidated Water Co. (NASDAQ:CWCO) is a leading designer, builder and operator of advanced water supply and treatment plants. The company has had several quarters of impressive revenue growth and continued that trend in the first quarter. Total revenue increased by 21% year-over-year (YOY) to reach $39.7 million while net income came in at $6.9 million. That’s a 68.3% YOY improvement from the $4.1 million in GAAP net income in Q1 of 2023.
The profitable utility company trades at a 12.5 P/E ratio and offers a 1.50% yield. In addition, the company has a solid dividend growth rate. Consolidated Water Co. raised its dividend by 11.8% in Q4 of 2023. A high dividend growth is a good sign that indicates the company is doing just fine with sustainable growth. Currently, the quarterly dividend stands at $0.095 per share.
Although shares are down by almost 30% year-to-date (YTD), CWCO stock is up by 85% over the past five years. The firm only has a $400 million market cap and remains a hidden gem. Profit margins are comfortably in the double-digits.
Comfort Systems USA (FIX)
Comfort Systems USA (NYSE:FIX) helps commercial and industrial clients with heating, ventilation and air conditioning installations. Also, the company offers repair and maintenance services as needed.
FIX only has an $11 billion market cap and trades at a 30 P/E ratio. It also has a 0.39% yield and an impressive dividend growth rate. The company usually raises its dividend twice per year and recently hiked its quarterly dividend by 20%.
Wondering how Comfort Systems USA maintains a high dividend growth rate? It comes down to impressive financials. Revenue increased by 31% YOY in Q1 of 2024 to reach $1.54 billion. Net income came in at $96.3 million which represents a 68.3% YOY increase. A $5.91 billion backlog suggests that the gains should keep on rolling, and the stock has certainly been doing well. Shares are up by 52% YTD and have soared by 528% over the past five years.
Crowdstrike (CRWD)
Crowdstrike (NASDAQ:CRWD) is a cybersecurity leader that was recently added to the S&P 500. The company boasts $3.65 billion in annual recurring revenue and grew its revenue by 33% YOY in Q1 of 2025.
This growth comes amid a general slowdown in the cybersecurity industry. Investors should take note of this, since over-performance with headwinds suggests meaningful growth when headwinds exit.
Also, net income has been a bright spot for the company. Crowdstrike’s $42.8 million in GAAP net income is a big jump from the $0.5 million GAAP net income in Q1 of 2024. Crowdstrike has partnerships with Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), and other leading tech companies.
The stock’s market cap is just shy of $100 billion, but recent momentum suggests Crowdstrike will break that barrier soon enough. Shares are up by 52% YTD and have surged by 484% over the past five years!
On this date of publication, Marc Guberti held long positions in FIX and CRWD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
