American martial artist Bruce Lee once said that “long-term consistency trumps short-term intensity”. The comment about martial arts holds true for stock markets as well. Consistent growth stocks have rewarded investors with higher returns time and again.
Companies like Varun Beverages and Tube Investments of India have grown their profits at a CAGR of over 30% in the past three fiscal years. They multiplied investors’ wealth at a whopping rate of over 60% between 2019 and 2022 end.
Varun Beverages has steadily expanded its distribution reach into newer geographies, and added new products to its portfolio. The company also took advantage of the sudden jump in out-of-home consumption post the omicron wave. It more than doubled its profits on a TTM basis and also doubled investors’ money in 2022.
Tube Investments has been diversifying its product portfolio away from the auto sector, which is cyclical in nature. The company managed to post robust growth between FY19-FY22, a period of downcycle for the auto space. It staged a successful turnaround of CG Power in FY22, which is now driving its higher growth along with its export markets.
PI industries is another player which has benefited from the consistent growth of its export business over the past few years. It also clocked strong revenue growth in the past few quarters on robust volumes. The company was a top industry outperformer in the past year.
Emerging as the dark horse in the telecom sector, Bharti Airtel staged a smart recovery post the slowdown in FY16-FY19, and returned to the black in FY22. Healthy subscriber addition, market share gain in 4G segment and the robust rise in average revenue per user aided its financial growth.
Smallcap capital goods stocks have also surprised investors with their consistent returns and net profit growth in the past three years. These companies benefited from strong order inflows as investments revived in railways, defence, infrastructure, metals and mining, and energy sectors. RHI Magnesita India and Timken India emerged as the fastest growers and wealth compounders within this group.
