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Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Space Group Holdings Limited (HKG:2448) share price is up 25% in the last year, clearly besting than the market return of around -7.3% (not including dividends). That’s a solid performance by our standards! Space Group Holdings hasn’t been listed for long, so it’s still not clear if it is a long term winner.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
Over the last twelve months, Space Group Holdings actually shrank its EPS by 46%. So we don’t think that investors are paying too much attention to EPS. Since the change in EPS doesn’t seem to correlate with the change in share price, it’s worth taking a look at other metrics.
Space Group Holdings’s revenue actually dropped 16% over last year. So the fundamental metrics don’t provide an obvious explanation for the share price gain.
Take a more thorough look at Space Group Holdings’s financial health with this free report on its balance sheet.
A Different Perspective
Space Group Holdings boasts a total shareholder return of 25% for the last year. A substantial portion of that gain has come in the last three months, with the stock up 14% in that time. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Is Space Group Holdings cheap compared to other companies? These 3 valuation measures might help you decide.
Of course Space Group Holdings may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.