Update: Hearts and Minds Investments (ASX:HM1) Stock Gained 40% In The Last Year

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the Hearts and Minds Investments Limited (ASX:HM1) share price is 40% higher than it was a year ago, much better than the market decline of around 0.7% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow Hearts and Minds Investments for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

View our latest analysis for Hearts and Minds Investments

Because Hearts and Minds Investments 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. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last year Hearts and Minds Investments saw its revenue grow by 43%. We respect that sort of growth, no doubt. Buyers pushed the share price 40% in response, which isn't unreasonable. If the company can maintain the revenue growth, the share price could go higher still. But it's crucial to check profitability and cash flow before forming a view on the future.

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

We consider it positive that insiders have made significant purchases in the last year. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's nice to see that Hearts and Minds Investments shareholders have gained 40% over the last year. And the share price momentum remains respectable, with a gain of 30% in the last three months. This suggests the company is continuing to win over new investors. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider risks, for instance. Every company has them, and we've spotted 4 warning signs for Hearts and Minds Investments you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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