10 Best-Performing S&P 500 Stocks in the Last 3 Years

5. Arista Networks, Inc. (NYSE:ANET)

3Y CAGR: 61%

Arista Networks, Inc. (NYSE:ANET) is a computer networking company out of Santa Clara, CA. The company provides client-to-cloud networking for data center, campus and routing environments. One of Arista’s key selling points is its Extensible Operating System,  that works across different cloud networks and is based on Linux, enabling integration with third-party software. Further,the company uses the same software across all its switches and routers and its operating system allows for sophisticated data analytics. All these factors allow for cheaper maintenance and updates, higher security, and fewer switching tiers, which leads to its clients having a lower total cost of ownership relative to legacy vendors.

Arista has rapidly gained market share in the datacenter switch market, from 3.5% in 2012 to 18.8% as of Q2, 2019, based on a Crehan Research Datacenter Switch Market Share Report. For the past three years, Arista had annualized gains of 61% and the stock has gained 73.6% YTD. The company posted strong financial results in its fiscal Q2 earnings report, with revenue having grown nearly 16% year over year, and EPS at 34.19%.

In their Q2, 2024 investor letter, Madison Mid Cap Fund talked about their confidence in ANET’s long-term growth prospects, but trimmed down their position due to the “risk/reward offered.”