The SDM Group Holdings (HKG:8363) Share Price Is Up 530% And Shareholders Are Delighted

For us, stock picking is in large part the hunt for the truly magnificent stocks. You won't get it right every time, but when you do, the returns can be truly splendid. One such superstar is SDM Group Holdings Limited (HKG:8363), which saw its share price soar 530% in three years. It's also good to see the share price up 41% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.

It really delights us to see such great share price performance for investors.

Check out our latest analysis for SDM Group Holdings

Given that SDM Group Holdings 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. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years SDM Group Holdings saw its revenue grow at 37% per year. That's well above most pre-profit companies. In light of this attractive revenue growth, it seems somewhat appropriate that the share price has been rocketing, boasting a gain of 85% per year, over the same period. It's always tempting to take profits after a share price gain like that, but high-growth companies like SDM Group Holdings can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.

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

We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

A Different Perspective

It's nice to see that SDM Group Holdings shareholders have received a total shareholder return of 98% over the last year. That's better than the annualised return of 20% 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. For example, we've discovered 2 warning signs for SDM Group Holdings (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

SDM Group Holdings 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 HK 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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