We recently published a list of 15 Stocks That Outperform the S&P 500 Every Year For the Last 3 Years. In this article, we are going to take a look at where Granite Construction Incorporated (NYSE:GVA) stands against other stocks that outperform the broader market.
Imagine choosing a group of stocks that not only weathered the market’s storm but also outpaced its peers. Clearly, a win. Such is the case of these 15 stocks that delivered returns greater than what the market had to offer over the last three years. Before we get down to those top-tier winners, let’s discuss what the broader market index actually is.
This may not be something new to seasoned investors. As one of the most widely known benchmarks of the United States, the S&P Index is considered the best gauge of notable American equities’ performance and the health of the economy, in general. Covering around 80% of market capitalization, the S&P is a float-weighted index, which means that the market capitalizations of all the companies included are adjusted by the volume of shares available for trading publicly. Since it’s an index, you can’t just invest in it directly, but rather you can invest in one of the many funds that use it as a benchmark and measure the overall performance.
As a research report by Alex Frino and David R. Gallagher stated:
“Over long horizons, index funds tracking the index consistently outperform the majority of actively managed funds, reflecting the efficiency of broad-market exposure.”
This highlights that S&P index funds generally deliver better results than most actively managed funds.
If we look at the 5-year trend for the broader market, the index witnessed a growth of around 105%. While this may be a decent growth rate, it’s not something truly amazing. The stocks in the index tumbled in 2022, mainly owing to the FED’s shift in monetary policy, the Russia-Ukraine war, and lingering post-COVID supply chain disruptions. Even after this period, the trendline is not something that would break records or catch an eye. In a span of 3 years, the stocks have witnessed a growth of 32%, which is just decent in this high-growth world.
From energy, agriculture, and finance to gold mining, automotive, technology, and construction industries, the companies have showcased strong returns in a short period. This is a result of favorable macroeconomic policies for these markets, particularly with Trump back in office. The stocks we have favored are the ones featuring good performance in the past, as well as the ones surrounding optimism in the future. Thus, we can safely say that it’s still not too late to invest in these stocks. As the elders used to say, “The best time to plant a tree was 20 years ago. The second-best time is now.”
Our Methodology
We have taken a list of 15 companies from Finviz and Yahoo Finance that have witnessed a growth rate of more than 32%, witnessed by the S&P index funds, over three years. These companies then have been listed in descending order, from the highest growth to the lowest growth. The trend line has been captured from Google’s latest stock prices, with respect to the returns of the respective shares.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A construction worker in full protective gear using heavy machinery to build a bridge.
Granite Construction Incorporated (NYSE:GVA)
3-Year Return as of the Close of March 12: 130%
Granite Construction Incorporated (NYSE:GVA) is a diversified construction and construction materials company. Incepted in 1992 and headquartered in California, the company has two main segments: Construction, and Materials. The construction powerhouse also offers its services in the transportation, water infrastructure, and mineral exploration markets. Recognized as one of the World’s Most Ethical Companies for eleven consecutive years, Granite is leading the market, excelling in safety, quality, and sustainability.
In a recent development, Granite Construction Incorporated (NYSE:GVA) announced that it has been awarded a $66 million contract by the California Department of Transportation for a project aimed at restructuring the Caldwell Avenue interchange located in California. The project will likely begin in August 2025 and be completed in Q2, 2027.
Granite Construction Incorporated (NYSE:GVA) is fully capitalizing on its M&A strategic initiatives. Moreover, experts have been added to the corporate development teams as the management explores M&A opportunities. With a focus on centralized materials leadership, strategic CapEx investment, and M&A, the management has a positive outlook for the next three years, targeting a 12% to 14% consolidated 2027 adjusted EBITDA margin.
Not only the management, but the analysts too are extremely optimistic. Analysts have predicted a high price of $119 and a low price of $80, with an average of $103. Keeping in consideration the current 13.33% ROE of Granite Construction Incorporated (NYSE:GVA), analysts expect it to maintain the current level of growth, if not higher. While the ROE is slightly lower than the industry average of 18%, the higher than peers five-year net income growth of 49% makes a decent case for GVA.
Overall, GVA ranks 10th on our list of stocks that outperform the broader market. While we acknowledge the potential for GVA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
