Did The Underlying Business Drive Abcourt Mines' (CVE:ABI) Lovely 450% Share Price Gain?

By
Simply Wall St
Published
September 13, 2020
TSXV:ABI

For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the Abcourt Mines Inc. (CVE:ABI) share price has soared 450% over five years. This just goes to show the value creation that some businesses can achieve. On top of that, the share price is up 175% in about a quarter.

Check out our latest analysis for Abcourt Mines

Abcourt Mines isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. 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.

For the last half decade, Abcourt Mines can boast revenue growth at a rate of 34% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 41% per year in that time. It's never too late to start following a top notch stock like Abcourt Mines, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
TSXV:ABI Earnings and Revenue Growth September 13th 2020

Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.

A Different Perspective

It's nice to see that Abcourt Mines shareholders have received a total shareholder return of 132% over the last year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 41% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Abcourt Mines better, we need to consider many other factors. To that end, you should be aware of the 3 warning signs we've spotted with Abcourt Mines .

We will like Abcourt Mines better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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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