Stock Analysis

Did The Underlying Business Drive High Tide's (CVE:HITI) Lovely 429% Share Price Gain?

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TSXV:HITI
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Active investing isn't easy, but for those that do it, the aim is to find the best companies to buy, and to profit handsomely. While not every stock performs well, when investors win, they can win big. For example, High Tide Inc. (CVE:HITI) has generated a beautiful 429% return in just a single year. On top of that, the share price is up 335% in about a quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report. We'll need to follow High Tide 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 High Tide

Given that High Tide didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Over the last twelve months, High Tide's revenue grew by 168%. That's stonking growth even when compared to other loss-making stocks. But the share price has really rocketed in response gaining 429% as previously mentioned. Despite the strong growth, it's certainly possible the market has gotten a little over-excited. So this looks like a great watchlist candidate for investors who look for high growth inflexion points.

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:HITI Earnings and Revenue Growth March 5th 2021

It's probably worth noting we've seen significant insider buying in the last quarter, which we consider a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. You can see what analysts are predicting for High Tide in this interactive graph of future profit estimates.

A Different Perspective

High Tide shareholders should be happy with the total gain of 429% over the last twelve months. And the share price momentum remains respectable, with a gain of 335% 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. For example, we've discovered 2 warning signs for High Tide (1 is a bit unpleasant!) that you should be aware of before investing here.

High Tide is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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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