Is Now The Time To Put Alphamin Resources (CVE:AFM) On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Alphamin Resources (CVE:AFM). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

View our latest analysis for Alphamin Resources

How Fast Is Alphamin Resources Growing Its Earnings Per Share?

In the last three years Alphamin Resources' earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. Thus, it makes sense to focus on more recent growth rates, instead. In impressive fashion, Alphamin Resources' EPS grew from US$0.04 to US$0.079, over the previous 12 months. Year on year growth of 96% is certainly a sight to behold.

It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Alphamin Resources achieved similar EBIT margins to last year, revenue grew by a solid 11% to US$391m. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

While profitability drives the upside, prudent investors always check the balance sheet, too.

Are Alphamin Resources Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

We haven't seen any insiders selling Alphamin Resources shares, in the last year. With that in mind, it's heartening that Brendon Jones, the company insider of the company, paid US$52k for shares at around US$0.64 each. Decent buying like this could be a sign for shareholders here; management sees the company as undervalued.

Recent insider purchases of Alphamin Resources stock is not the only way management has kept the interests of the general public shareholders in mind. Namely, Alphamin Resources has a very reasonable level of CEO pay. For companies with market capitalisations between US$400m and US$1.6b, like Alphamin Resources, the median CEO pay is around US$1.5m.

The CEO of Alphamin Resources only received US$635k in total compensation for the year ending December 2021. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO remuneration levels are not the most important metric for investors, but when the pay is modest, that does support enhanced alignment between the CEO and the ordinary shareholders. It can also be a sign of a culture of integrity, in a broader sense.

Does Alphamin Resources Deserve A Spot On Your Watchlist?

Alphamin Resources' earnings per share growth have been climbing higher at an appreciable rate. Better yet, we can observe insider buying and the chief executive pay looks reasonable. The strong EPS growth suggests Alphamin Resources may be at an inflection point. If so, then its potential for further gains probably merit a spot on your watchlist. We don't want to rain on the parade too much, but we did also find 1 warning sign for Alphamin Resources that you need to be mindful of.

The good news is that Alphamin Resources is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.