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Multibagger stocks can help you reach your financial goals faster. And many growth stocks have had incredible rallies. Nvidia (NASDAQ:NVDA) is the multibagger in everyone’s mind. While artificial intelligence (KI) leader can still generate higher returns for long-term investors, this has been made public.
Finding hidden multibaggers can lead to higher profits in the long run. While Nvidia is up more than 3,000% over the past five years, it’s unlikely to repeat that growth over the next five. While it’s tough for any stock to achieve those returns, it is possible to find stocks that more than double in a few years.
That’s why investors should set their sights on companies with rising revenues and profit margin growth. And these companies with long-term catalysts can deliver further stock gains. These three stocks fit those parameters, but they’re not as well-known. None of these stocks are currently in the S&P 500 and remain hidden. Let us now reveal them.
Duolingo (DUOL)
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Duolingo (NASDAQ:DUOL) is an educational technology company that makes it easier for people to learn new languages. The company offers verbal and written activities to help people learn a language. The gamified experience keeps people coming back, based on Duolingo’s 31.4 million daily active users. That’s a 54% year-over-year (YEAR) increase. In addition, the number of monthly active users increased by 35% YOY to 97.6 million.
Additionally, revenue and profit growth rates remained high as more people flocked to the Duolingo app. Revenue increased 45% year-over-year, while net income came in at $27.0 million. That’s a big turnaround from the company’s net loss of $2.6 million in the same quarter last year.
Notably, Duolingo is rapidly gaining momentum, up 37% year-to-date. The stock has a high price-to-earnings ratio, but net profit margins have soared. Therefore, higher profits and continued revenue growth could make the $8 billion company attractive to long-term investors.
Texas Roadhouse (TXRH)
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Restaurant stocks have risen sharply in recent years. Chipotle (NYSE:CMG) has attracted a lot of attention, as it has more than quadrupled in value over the past five years. A recent 50-for-1 stock split has made Chipotle more affordable on a per-share basis, drawing even more attention to the stock.
But this isn’t about Chipotle. It’s about Texas Roadhouse (NASDAQ:TXRH). The steakhouse chain also benefited from growing demand for restaurant stocks. Shares have risen 40% since the beginning of the year (YTD), more than tripled in the past five years. Yet Texas Roadhouse still has a reasonable P/E of 34 and offers a yield of 1.46%. Very few high-growth restaurant stocks offer a decent P/E and a dividend. Most offer neither.
The company also reported 12.5% year-over-year revenue growth and 31.0% year-over-year net income growth in the first quarter. Comparable restaurant sales increased 8.4% year-over-year, demonstrating strong demand for the company’s restaurants. Texas Roadhouse has 753 restaurants. The company owns 644 of those restaurants, and the remaining 109 restaurants are franchises.
Elf Beauty (ELF)
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Elf Beauty (NYSE:ELEVEN) is nearing S&P 500 status. The cosmetics company has gained more than 1,300% over the past five years. Shares are up 45% YTD amid strong financial results. Elf Beauty reported 71% year-over-year revenue growth in Q4 of fiscal 2024. The company has now reported 21 consecutive quarters of net sales and market growth. Elf Beauty has also gained market share for the 5th consecutive year, while other beauty companies such as Ulta Beauty (NASDAQ:ULTA) report slowing sales growth.
Additionally, Elf Beauty is targeting Gen Z and other generations by using cruelty-free ingredients in its beauty products. The efforts have paid off based on recent financial results. Elf Beauty’s outlook for fiscal year 2025 suggests the stock could gain more ground. Comment by Tarang Amin, Chief Executive Officer of Elf Beauty (Director), suggests additional catalysts.
“Looking ahead, we believe we are still in the early stages of unlocking the full potential we see for elf Beauty across cosmetics, skincare and international markets,” said Amin.
On this publication date, Marc Guberti held long positions in NVDA, TXRH, and ELF. The opinions expressed in this article are the opinions of the author, subject to InvestorPlace.com Publishing Guidelines.
The responsible issuer had no positions (either directly or indirectly) in the securities mentioned in this article on the date of publication.
Marc Guberti is a freelance finance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to a variety of publications, including U.S. News & World Report, Benzinga, and Joy Wallet.
