The pursuit of long-term growth in equity investments often hinges on the allure of valuation multiples expanding or profit margins improving. However, a compelling case can be made for identifying stocks that can deliver substantial returns—potentially tripling in value over a five-year horizon—without relying on these external catalysts. This approach demands a focus on intrinsic drivers of value, such as revenue growth and capital allocation strategies like share buybacks, which can compound returns even if market sentiment or profitability ratios remain static. This perspective, quietly echoed in discussions on platforms like X by accounts such as Rose Celine Investments, merits a deeper dive into how investors can construct portfolios with resilience to stagnant multiples or margins.
Revenue Growth as the Bedrock of Returns
For a stock to achieve significant appreciation without a rerating of its price-to-earnings (P/E) multiple or an uplift in margins, consistent top-line growth is non-negotiable. Companies that can sustain double-digit revenue increases over multiple years create a compounding effect on earnings per share (EPS), even if the percentage of revenue converted to profit holds steady. Take, for instance, a hypothetical firm with £1 billion in annual revenue and a 10% net margin, yielding £100 million in profit. At a P/E multiple of 20, the market cap stands at £2 billion. If revenue grows at a compound annual growth rate (CAGR) of 15% over five years, reaching £2.01 billion, and margins remain flat, profits would rise to £201 million. With an unchanged multiple, the market cap could climb to £4.02 billion—a doubling of value without any external boost.
Real-world examples bear this out. Consider NVIDIA Corporation (NVDA), which reported revenue of £60.9 billion for its fiscal year 2025 (ended January 2025), a staggering 126% increase from £26.9 billion in fiscal 2024. Even if its operating margin, which improved to 54.1% in fiscal 2025 from 25.9% the prior year, were to stabilise, the sheer pace of revenue expansion suggests EPS growth could drive stock price appreciation without requiring a higher P/E ratio. Investors focusing on such growth trajectories can prioritise sectors like technology or healthcare, where structural tailwinds—think artificial intelligence or ageing populations—fuel sustained demand.
Share Buybacks: A Quiet Multiplier
Beyond revenue, share repurchases offer a potent mechanism for value creation that does not depend on market reratings or margin gains. By reducing the number of outstanding shares, buybacks increase EPS, effectively amplifying the impact of revenue growth on per-share metrics. Returning to the earlier example, if the hypothetical company allocates 50% of its net income to buybacks, it could retire approximately 25% of its shares over five years, assuming a constant P/E. This would push EPS growth beyond the rate of profit growth, potentially lifting the stock price to £4.5 billion or more—a 3x return from the starting point.
Apple Inc. (AAPL) provides a textbook case. In its fiscal year 2024 (ended September 2024), Apple repurchased £29.9 billion worth of shares, reducing its share count by roughly 2.5% year-over-year. With revenue growth of 4.9% to £385.6 billion in the same period, the combination of modest top-line increases and aggressive buybacks has historically supported stock price gains even during periods of stable multiples. For the fiscal 2025 outlook, analysts project revenue growth of 6% to 8%, and if buybacks continue at a similar pace, EPS could outstrip profit growth, offering returns without margin expansion.
Identifying Candidates for Long-Term Holding
Screening for stocks capable of delivering outsized returns without reliance on external factors involves a disciplined focus on specific metrics. Revenue CAGR over the past three to five years should ideally exceed 10%, with forward guidance suggesting continuity. Net income allocation to buybacks, typically reported in annual filings under cash flow statements, should be consistent and material—ideally 30% or more of free cash flow. Additionally, debt levels must be manageable to ensure buybacks do not strain balance sheets.
The following table highlights three companies exhibiting these characteristics based on data up to Q2 2025 (April to June 2025) or the latest available filings:
| Company | Ticker | 5-Year Revenue CAGR | Buyback % of FCF (2024) | Debt-to-Equity Ratio |
|---|---|---|---|---|
| Microsoft Corporation | MSFT | 14.2% | 35% | 0.37 |
| Alphabet Inc. | GOOG | 13.8% | 40% | 0.10 |
| Visa Inc. | V | 10.5% | 45% | 0.52 |
Risks and Realism in Execution
While the strategy of banking on revenue growth and buybacks appears sound, it is not without pitfalls. Revenue projections can falter due to macroeconomic headwinds or competitive pressures—NVIDIA’s growth, for instance, could slow if AI hardware demand plateaus. Buybacks, meanwhile, lose efficacy if executed at inflated valuations, as the company effectively overpays for its own shares. Investors must also contend with the opportunity cost of holding for five years or more, a period during which market dynamics could shift unfavourably.
Still, the beauty of this approach lies in its simplicity and control. Rather than betting on fickle market sentiment to inflate multiples or hoping for operational miracles to boost margins, the focus remains on tangible, repeatable drivers of value. For those with the patience to hold, the numbers suggest that a 3x return is not a pipe dream but a calculated possibility.
References
- Alphabet Inc. (2025, July 23). Q2 2025 Earnings Release. Retrieved from https://abc.xyz/investor/
- Apple Inc. (2024, October 31). Fiscal Year 2024 Annual Report. Retrieved from https://investor.apple.com/sec-filings/default.aspx
- Celine, R. [@realroseceline]. (n.d.). [Post]. X. https://x.com/realroseceline/status/1915807799898214918
- Celine, R. [@realroseceline]. (n.d.). [Post]. X. https://x.com/realroseceline/status/1930440564207694320
- Celine, R. [@realroseceline]. (n.d.). [Post]. X. https://x.com/realroseceline/status/1935139595425067107
- Celine, R. [@realroseceline]. (n.d.). [Post]. X. https://x.com/realroseceline/status/1936208742728806428
- Celine, R. [@realroseceline]. (n.d.). [Post]. X. https://x.com/realroseceline/status/1940795079809290652
- Fool.com. (n.d.). Value investing guide. Retrieved from https://www.fool.com/investing/stock-market/types-of-stocks/value-stocks/value-investing-guide/
- Investing.com. (n.d.). CrowdStrike’s valuation now looks full, says Morgan Stanley. Retrieved from https://www.investing.com/news/stock-market-news/crowdstrikes-valuation-now-looks-full-says-morgan-stanley-4134233
- Investopedia. (n.d.). Choosing between valuation methods. Retrieved from https://www.investopedia.com/articles/fundamental-analysis/11/choosing-valuation-methods.asp
- Investopedia. (n.d.). Five must-have metrics for value investors. Retrieved from https://www.investopedia.com/articles/fundamental-analysis/09/five-must-have-metrics-value-investors.asp
- Investopedia. (n.d.). Value or growth stocks: Which is best?. Retrieved from https://www.investopedia.com/articles/professionals/072415/value-or-growth-stocks-which-best.asp
- Investopedia. (n.d.). Value investing. Retrieved from https://www.investopedia.com/terms/v/valueinvesting.asp
- Medium. (n.d.). 10 proven stock market investment strategies for beginners. Retrieved from https://medium.com/illuminati-writers/10-proven-stock-market-investment-strategies-for-beginners-680c749ea9fb
- Microsoft Corporation. (2025, July 30). Q2 2025 Earnings Release. Retrieved from https://www.microsoft.com/en-us/Investor/earnings/FY-2025-Q2/press-release-webcast
- News18. (n.d.). How to analyse stocks for long-term investment: A beginner’s guide. Retrieved from https://news18.com/business/how-to-analyse-stocks-for-long-term-investment-a-beginners-guide-ws-l-aa-9440129.html
- NVIDIA Corporation. (2025, February 21). Fiscal Year 2025 Annual Report. Retrieved from https://investor.nvidia.com/financial-info/annual-reports/default.aspx
- Stockstory.org. (n.d.). 3 value stocks facing headwinds. Retrieved from https://stockstory.org/us/stocks/nyse/arw/news/buy-or-sell/3-value-stocks-facing-headwinds
- Visa Inc. (2025, April 23). Q2 2025 Earnings Release. Retrieved from https://investor.visa.com/financial-information/quarterly-earnings/
- Yahoo Finance. (n.d.). 4 no-brainer blue chip stocks to buy and hold forever. Retrieved from https://finance.yahoo.com/news/4-no-brainer-blue-chip-121700462.html
