Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example Robit Oyj (HEL:ROBIT). Its share price is already up an impressive 181% in the last twelve months. Meanwhile the share price is 3.1% higher than it was a week ago. In contrast, the longer term returns are negative, since the share price is 12% lower than it was three years ago.
Because Robit Oyj 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. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Robit Oyj grew its revenue by 6.0% last year. That's not a very high growth rate considering it doesn't make profits. So we wouldn't have expected the share price to rise by 181%. The business will need a lot more growth to justify that increase. We're not so sure that revenue growth is driving the market optimism about the stock.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Take a more thorough look at Robit Oyj's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Robit Oyj shareholders have received a total shareholder return of 181% over the last year. There's no doubt those recent returns are much better than the TSR loss of 1.7% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course Robit Oyj may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on FI 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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