Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the 7Road Holdings Limited (HKG:797) share price has soared 101% return in just a single year. Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
Because 7Road Holdings made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last year 7Road Holdings saw its revenue shrink by 51%. We’re a little surprised to see the share price pop 101% in the last year. This is a good example of how buyers can push up prices even before the fundamental metrics show much growth. It’s quite likely the revenue fall was already priced in, anyway.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling 7Road Holdings stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It’s nice to see that 7Road Holdings shareholders have gained 101% over the last year. The more recent returns haven’t been as impressive as the longer term returns, coming in at just 9.0%. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). It’s always interesting to track share price performance over the longer term. But to understand 7Road Holdings better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 2 warning signs for 7Road Holdings (of which 1 is concerning!) you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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.
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. Thank you for reading.