Did Business Growth Power Calix's (ASX:CXL) Share Price Gain of 289%?

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%. Take, for example Calix Limited (ASX:CXL). Its share price is already up an impressive 289% in the last twelve months. On top of that, the share price is up 30% in about a quarter. We'll need to follow Calix 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 Calix

Because Calix 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 fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last year Calix saw its revenue grow by 256%. That's well above most other pre-profit companies. And the share price has responded, gaining 289% as we previously mentioned. That sort of revenue growth is bound to attract attention, even if the company doesn't turn a profit. Given the positive sentiment around the stock we're cautious, but there's no doubt its worth watching.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

If you are thinking of buying or selling Calix stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

Calix shareholders should be happy with the total gain of 289% over the last twelve months. That's better than the more recent three month gain of 30%, implying that share price has plateaued recently. It seems likely the market is waiting on fundamental developments with the business before pushing the share price higher (or lower). While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 4 warning signs for Calix (1 is a bit concerning) that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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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