Investors bid Nations Technologies (SZSE:300077) up CN¥857m despite increasing losses YoY, taking five-year CAGR to 38%

Long term investing can be life changing when you buy and hold the truly great businesses. And highest quality companies can see their share prices grow by huge amounts. To wit, the Nations Technologies Inc. (SZSE:300077) share price has soared 400% over five years. If that doesn't get you thinking about long term investing, we don't know what will. It's also good to see the share price up 227% over the last quarter.

Since the stock has added CN¥857m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Nations Technologies

Nations Technologies isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally hope to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

In the last 5 years Nations Technologies saw its revenue grow at 23% per year. That's well above most pre-profit companies. Arguably, this is well and truly reflected in the strong share price gain of 38%(per year) over the same period. It's never too late to start following a top notch stock like Nations Technologies, since some long term winners go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

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

Take a more thorough look at Nations Technologies' financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Nations Technologies shareholders have received a total shareholder return of 154% over one year. That's better than the annualised return of 38% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Nations Technologies you should know about.

We will like Nations Technologies better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) 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 Chinese exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.