Can You Imagine How Jubilant Terragen Holdings' (ASX:TGH) Shareholders Feel About Its 156% Share Price Gain?

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right stock, you can make a lot more than 100%. For example, the Terragen Holdings Limited (ASX:TGH) share price has soared 156% return in just a single year. It's also up 17% in about a month. We'll need to follow Terragen Holdings for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.

See our latest analysis for Terragen Holdings

Because Terragen 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

Over the last twelve months, Terragen Holdings' revenue grew by 56%. That's well above most other pre-profit companies. Meanwhile, the market has paid attention, sending the share price soaring 156% in response. It's great to see strong revenue growth, but the question is whether it can be sustained. The strong share price rise indicates optimism, so there may be a better opportunity for buyers as the hype fades a bit.

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

It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. Dive deeper into the earnings by checking this interactive graph of Terragen Holdings' earnings, revenue and cash flow.

A Different Perspective

Terragen Holdings shareholders should be happy with the total gain of 156% over the last twelve months. The more recent returns haven't been as impressive as the longer term returns, coming in at just 2.5%. 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). It's always interesting to track share price performance over the longer term. But to understand Terragen Holdings better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Terragen Holdings you should be aware of.

There are plenty of other companies that have insiders buying up shares. You probably do 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 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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