By now, most investors are familiar with the big-name winners on the stock market over the last year.
Dubbed the "Magnificent Seven," these seven tech stocks all beat the market last year, and three of them, Nvidia, Meta Platforms, and Tesla all doubled. But not every big winner gets a lot of attention on Wall Street.
In fact, some stocks have been flying under the radar for years, but still generating massive returns for investors. Keep reading to see two such "average" stocks that have crushed the market over the past five years.
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1. Saia: An overlooked winner in trucking
Trucking isn't considered the most attractive industry. On the surface, it doesn't seem to lend itself to many competitive advantages, and margins seem likely to be squeezed out by labor costs, equipment, and fuel.
However, there is one corner of the trucking industry that has produced a bevy of winners in recent years. That's less-than-truckload trucking, also known as LTL. Unlike full truckload (FTL), LTL margins have a broad range depending on how efficiently operators can match with shippers to fill trucks and move freight efficiently.
The industry has produced a few big winners in recent years and one of those is Saia (NASDAQ: SAIA). Saia might not be a household name among investors, but you've probably seen its trucks on the highway. As you can see from the chart below, Saia has quietly returned more than 600% to investors over the last five years.
A few events have worked in the company's favor during that time. First, its revenue jumped during the pandemic as demand for e-commerce and related goods soared while the brick-and-mortar channel struggled. More recently, the company benefited from the bankruptcy of Yellow, the country's third-biggest LTL carrier, which collapsed after it was unable to reach an agreement with its union. Saia also recently acquired 17 of Yellow's terminals.
Saia's third-quarter results reflected some of the recent macroeconomic headwinds in the industry and sluggish demand. Revenue was up 6.2% to $775.1 million, but its operating margin fell by 100 basis points leading to flat earnings per share.
Part of the stock's surge over the last five years came from expanding margins, but its price-to-earnings ratio also more than doubled to 35. That's going to make it more challenging for Saia to continue to outperform the market, but if interest rates fall and the economy shows signs of strengthening, the stock should continue to be a winner.
2. Wingstop: A top-notch restaurant stock
Most investors are familiar with the top-performing restaurant stocks of the past decade or so, including McDonald's, Domino's, Starbucks, and Chipotle, but one of the biggest winners in the industry has been a smaller fast-casual chain, Wingstop (NASDAQ: WING).
Wingstop favors out-of-the-way locations. Its menu is limited to mostly wings, and the company is focused primarily on pickup and delivery. Its marketing budget is much smaller than the likes of McDonald's or Domino's, but that's been a winning formula for the company.
Wingstop is a primarily franchised business whose sales have soared in recent years, fueling an aggressive expansion in the U.S. and around the world. That success has pushed the stock up 274% over the past five years.
Those gains have come primarily from improving profits as the business model gains leverage, and Wingstop's track record speaks for itself.
The chicken wing chain has delivered 19 consecutive years of same-store sales growth, an impressive streak through both the pandemic and the great financial crisis.
Domestic same-store sales jumped 15.3% in its most recent quarter with digital sales accounting for two-thirds of systemwide sales, and the company continues to deliver expanding margins as adjusted earnings per share jumped 53.3% to $0.69.
Wingstop is expensive with a price-to-earnings ratio above 100, but the company has a long runway of growth ahead of it with as it sees room in the market for 7,000 locations, up from roughly 2,100 today.
If it can execute on its growth plan, the stock is a good bet to keep outperforming.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Chipotle Mexican Grill, Meta Platforms, and Starbucks. The Motley Fool has positions in and recommends Chipotle Mexican Grill, Domino's Pizza, Meta Platforms, Nvidia, Starbucks, Tesla, and Wingstop. The Motley Fool has a disclosure policy.
