3 Stocks That Have Doubled and Still Have Room to Grow

High-flying stocks have a lot of optimism baked into their share prices, but often that investor confidence has been earned through the type of solid operating results that could pave the way for bigger gains ahead.

Below, we'll look at a few of these market darlings that three of our Motley Fool investors believe have room to extend their recent triple-digit rallies. Read on for a bullish take on Domino's Pizza (NYSE: DPZ), Cintas (NASDAQ: CTAS), and Axxon Enterprises (NASDAQ: AAXN).

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Demitri Kalogeropoulos (Domino's Pizza): You might think Domino's doesn't have much gas left in its rally tank after shares have doubled since mid-2015. Its core product is easily replicated, and just about every food-seller on the market, from McDonald's to Kroger is trying its hand at home delivery.

Yet Domino's track record suggests that its growth comes from an enduring competitive advantage rather than just a lucky cyclical spike. For example, the company has consistently gained market share in the core pizza delivery industry over the past decade. That success is due to a few factors that are difficult for rivals to match, including its strong store economics, its aggressive innovation posture, and its network of over 5,000 restaurants across the U.S.

Domino's is aiming to get that number up to as high 8,000 over time, and its addressable market is even bigger in the international arena. The pizza chain's high debt level is a yellow flag that investors will want to keep an eye on, but for now it makes sense that management would be directing resources toward aggressively expanding its store base. The most recent quarter included accelerating sales growth and spiking profitability, after all.

A major player in a fractured industry


John Bromels (Cintas): Conventional wisdom says that the larger a company is, the harder it's going to be for it to grow. Well, don't tell that to shareholders of uniform rental and business services company Cintas, which despite being large enough to be a member of the S&P 500 and the Fortune 500, has managed to grow its share price by more than 300% over the last five years. To put that in perspective, it's better than Tesla.

As the leader in North American uniform rental, Cintas has been able to fuel this explosive growth by gobbling up smaller competitors like G&K Services, and through organic expansion as well. The company has also expanded into related business services like floor mat rental, restroom and first aid kit restocking, and fire and safety equipment rental. These related businesses are easy to add, because the same delivery route can restock uniforms, floor mats, and other equipment.

Even after all this growth, though, the uniform rental market remains fragmented, offering more opportunities for Cintas to continue expanding. In its most recent quarter, overall organic growth came in at 8%, but organic growth in the first aid and safety services segment was 10%. Cintas should continue to grow in the coming years, rewarding investors along the way.

There’s no stopping Axon now

Rich Duprey (Axon Enterprises): The future was looking extremely bright for Axon Enterprises beforehand, but after acquiring its primary rival, it doesn't look like there is any impediment to the stun gun maker's forward ascent.

Axon is the dominant player in the conducted electrical weapon category, with its Taser-branded stun guns entering the lexicon as the generic word for the devices. Even the act of getting shocked by one of the devices — "Don't tase me, bro!" — has been colloquialized. And although stun guns still account for the majority of Axon's revenue, their ubiquity limits their future growth, so it is in body cameras and evidence management where Axon has set its sights for tomorrow.

Axon is also the leader in body cams for law enforcement, with contracts with 37 of the 69 major cities in the U.S. Now it has acquired its primary competitor Vievu, for which it paid $4.6 million in cash and $2.5 million in stock. Together, Axon will now completely dominate the market, which continues to be a growing one as demand for greater police accountability and protection of both officers and the public grows.

The third leg of Axon's pillars of opportunity is in evidence database management. Law enforcement agencies generate a lot of records and a chain of evidence, particularly with the growing use of cameras, is essential. Axon's Evidence.com helps the agencies manage all of that, while also making use of the data simpler. If you need to find a particular incident on a camera, the software can zero in on it in seconds and make it readily available.

While Axon Enterprise stock has soared over 140% in just six months, these three prongs indicate shares can continue to shock investors by climbing even higher in the future.

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Demitrios Kalogeropoulos owns shares of McDonald's and Tesla. John Bromels owns shares of Cintas and Tesla. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Axon Enterprise and Tesla. The Motley Fool recommends Cintas. The Motley Fool has a disclosure policy.

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