The dream of every investor is uncovering the next “10-bagger” stock. While it’s tough to predict a 1,000% gainer, Zoe’s Kitchen (ZOES),DexCom (DXCM) and Palo Alto Networks (PANW) all have the right ingredients to become 10-baggers in the next several years.
Zoe’s Kitchen (ZOES)
The trick to catching a 10-bagger is to seek out rapid growth, a large potential market and a company with room for expansion. In the restaurant business, ZOES has all the important 10-bagger ingredients. ZOES now has 170 locations in 18 states, but it added 34 stores in 2015 alone, upping its total by more than 25%. The company plans on opening another 36 locations in 2016. Fast casual rivals like Chipotle (CMG) and Panera (PNRA) already have in the neighborhood of 2,000 locations each, so there’s plenty of room for ZOES to expand its U.S. presence.
ZOES market cap is currently just $712 million, but the company has increased its sales by an average annual rate of 47.6% in the past five years, according to Finviz. In the most recent quarter, revenue jumped 31.7%.
Looking ahead, EPS is expected to grow 39.8% annually through 2021. Thankfully, not all this growth is coming from opening new restaurants. ZOES reported a 7.7% increase in comparable restaurant sales in Q4 and witnessed a 2.8% increase in traffic.
If ZOES keeps on this growth track, it could easily follow in CMG or PNRA’s footsteps in the next decade.
DexCom (DXCM)
Medical device company DXCM is…
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