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. To wit, the Bubs Australia Limited (ASX:BUB) share price is 72% higher than it was a year ago, much better than the market return of around 6.2% (not including dividends) in the same period. So that should have shareholders smiling. Bubs Australia hasn’t been listed for long, so it’s still not clear if it is a long term winner.
Given that Bubs Australia didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. When a company doesn’t make profits, we’d generally expect to see good revenue growth. 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 Bubs Australia saw its revenue grow by 160%. That’s well above most other pre-profit companies. While the share price gain of 72% over twelve months is pretty tasty, you might argue it doesn’t fully reflect the strong revenue growth. If that’s the case, now might be the time to take a close look at Bubs Australia. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Bubs Australia in this interactive graph of future profit estimates.
A Different Perspective
Bubs Australia boasts a total shareholder return of 72% for the last year. That’s better than the more recent three month gain of 12%, implying that share price has plateaued recently. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU exchanges.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.