These 5 stocks can help you supercharge your portfolio. Here’s why.

In the long run, S&P 500 produced an annual return of approximately 10% per year. For the individual investor looking to pick individual businesses, perhaps the obvious objective is to outperform the broader index over the long term.

This might seem like a daunting task as even most active fund managers lose to the market. But I think average investors can supercharge their returns by focusing on one important feature. These actions are proof that this strategy has merit.

Think like a customer

As individual investors, we may forget that we have valuable first-hand knowledge of some businesses. That’s because we are also customers of many companies. Using this insight and identifying businesses that do a fantastic job of taking care of their customers by providing superior products or services, we can find potential stock ideas.

At the end of the day, customers are the ones who generate revenue for companies. There is no argument here. This ultimately leads to profits and cash flow, which can lead to happy shareholders.

Check out these five actions

If you adopt this frame of mind, then it’s actually quite easy to find companies that delight their customers. I have chosen five obvious examples.

Costco (COST 1.30%) it’s loved by its shoppers, who can’t get enough of its low prices and treasure-hunting experience. Worldwide membership renewal rate of over 90% exemplifies customer loyalty. It is also worth mentioning that the number of member households has increased by 40% in the last five years. In the last decade, this top retail stock generated a total return of 807%.

The restaurant industry is extremely competitive, but Chipotle Mexican Grill (CMG -0.34%) has found remarkable success by focusing on real ingredients, having a simple menu, and offering customers tremendous value. This is especially true after the health crisis of 2015, when the business regained the trust of consumers and investors. Shares are up 226% over the past five years, driven in part by sales growth of 114% over that time.

Image source: Amazon.

Companies in the technology sector are also notable. Just look at Netflix (NFLX 0.65%)which disrupted the media industry with its help streaming service which now has 278 million subscribers worldwide. The business offered a much better viewer experience at a lower price than traditional cable television.

Amazon (AMZN -1.66%) founder Jeff Bezos was the first to publicly mention in the company’s 1997 shareholder letter that customer obsession was a top strategic priority. The company’s Prime membership is wildly successful, offering fast and free shipping on millions of items, among other valuable benefits.

Then there’s more Apple (AAPL -0.86%)which sells some of the most sought after products the world has ever seen. The company’s seamless combination of hardware and software creates a powerful ecosystem that essentially locks in customers, backed by an active installed base of over 2.2 billion. Historically, Apple has been able to flex pricing powerby introducing new devices at fixed prices while offering older models at a discount — an offer consumers often found too tempting to pass up.

Investors won’t find many investments that have done better than these three. Netflix, Amazon, and Apple have seen their shares grow by 933%, 899%, and 768%, respectively, over the past 10 years.

Pay the right price

These five stocks are the perfect example of companies that continue to focus on meeting the needs of their customers. Investors can look around and find other businesses doing the same thing. It’s another filter to add to your analysis toolkit and use before making an investment decision.

But to be clear, the aforementioned stocks are not automatic purchases today. Rating is another important factor to consider. Looking at the popular the forward price-earnings ratio relative to other variables, namely upside potential, I think investors should wait for a pullback before considering buying Costco, Chipotle, and Apple. Netflix and Amazon, on the other hand, look like better buying opportunities right now.