Only 20 stocks out of the entire S&P 500 Index have remarkable revenue growth. These companies have boosted sales at a rate of at least 10% per year since 2021. This upward trend is expected to continue at least through 2025.
Equity analysts from Goldman Sachs screened these stocks and studied their performance, using what’s called the “Rule of 10.”
The ‘Rule of 10’ Has Outperformed The S&P 500
The investment bank noted that rapid and consistent revenue growth has been a key feature of many of today’s largest stocks.
From 2013 to 2019, the seven largest publicly traded technology companies have seen their sales increase by an impressive 15% compound annual growth rate (CAGR). They are:
- Apple Inc. AAPL
- Microsoft Corp. MSFT
- Alphabet Inc. GOOG GOOGL
- Amazon Inc. AMZN
- Meta Platforms Inc. META
- NVIDIA Corp. NVDA
- Tesla, Inc. TSLA
Meanwhile, the revenues for the S&P 500 as a whole only increased by 4% during the same time frame.
This double-digit increase in annual sales has had a clear positive effect on stock performance.
As for the seven tech giants, they have led the S&P 500 with a remarkable return of 58% so far in 2023. They also eclipsed the 5% gained by the remaining 493 stocks.
Investors who have built a portfolio according to the “Rule of 10” in 2023 outperformed the S&P 500 by 2% and the equally-weighted S&P 500 by 12%.
S&P 500 Stocks That Comply With The ‘Rule of 10’
| Company | Sector | Market cap ($ bn) | YTD % | 2019 to present % | P/E | 2022-25E Sales growth CAGR |
|---|---|---|---|---|---|---|
| Enphase Energy ENPH | Information Technology | $22 | (40)% | 508% | 24 | 27% |
| Tesla TSLA | Consumer Discretionary | $812 | 109% | 823% | 63 | 26% |
| SolarEdge Tech SEDG | Information Technology | $15 | (10)% | 167% | 22 | 24% |
| Palo Alto Networks PANW | Information Technology | $78 | 82% | 229% | 51 | 22% |
| ServiceNow NOW | Information Technology | $112 | 41% | 94% | 51 | 22% |
| Paycom Software PAYC | Industrials | $19 | 1% | 19% | 37 | 21% |
| Fortinet Inc FTNT | Information Technology | $58 | 54% | 252% | 47 | 21% |
| DexCom DXCM | Health Care | $49 | 13% | 134% | 99 | 20% |
| Insulet PODD | Health Care | $21 | (1)% | 70% | 162 | 19% |
| Axon Enterprise AXON | Industrials | $14 | 18% | 167% | 57 | 19% |
| Arista Networks ANET | Information Technology | $48 | 31% | 213% | 26 | 16% |
| Ceridian CDAY | Industrials | $10 | 3% | (3)% | 48 | 16% |
| Chipotle CMG | Consumer Discretionary | $58 | 52% | 152% | 43 | 14% |
| Intuit INTU | Information Technology | $129 | 18% | 78% | 29 | 13% |
| Adobe ADBE | Information Technology | $221 | 44% | 47% | 29 | 12% |
| Cadence Design Systems CDNS | Information Technology | $63 | 42% | 229% | 42 | 12% |
| Monster Beverage MNST | Consumer Staples | $60 | 13% | 81% | 34 | 12% |
| Starbucks SBUX | Consumer Discretionary | $113 | 0% | 20% | 25 | 11% |
| Aptiv APTV | Consumer Discretionary | $29 | 8% | 6% | 19 | 11% |
| Salesforce CRM | Information Technology | $207 | 59% | 29% | 26 | 11% |
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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