Is Now The Time To Put Freetech Road Recycling Technology (Holdings) (HKG:6888) On Your Watchlist?

It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks with a good story, even if those businesses lose money. And in their study titled Who Falls Prey to the Wolf of Wall Street?' Leuz et. al. found that it is 'quite common' for investors to lose money by buying into 'pump and dump' schemes.

So if you're like me, you might be more interested in profitable, growing companies, like Freetech Road Recycling Technology (Holdings) (HKG:6888). Now, I'm not saying that the stock is necessarily undervalued today; but I can't shake an appreciation for the profitability of the business itself. While a well funded company may sustain losses for years, unless its owners have an endless appetite for subsidizing the customer, it will need to generate a profit eventually, or else breathe its last breath.

See our latest analysis for Freetech Road Recycling Technology (Holdings)

How Fast Is Freetech Road Recycling Technology (Holdings) Growing Its Earnings Per Share?

In business, though not in life, profits are a key measure of success; and share prices tend to reflect earnings per share (EPS). So like the hint of a smile on a face that I love, growing EPS generally makes me look twice. You can imagine, then, that it almost knocked my socks off when I realized that Freetech Road Recycling Technology (Holdings) grew its EPS from HK$0.0039 to HK$0.03, in one short year. When you see earnings grow that quickly, it often means good things ahead for the company.

I like to take a look at earnings before interest and (EBIT) tax margins, as well as revenue growth, to get another take on the quality of the company's growth. While we note Freetech Road Recycling Technology (Holdings)'s EBIT margins were flat over the last year, revenue grew by a solid 11% to HK$542m. That's progress.

In the chart below, you can see how the company has grown earnings, and revenue, over time. Click on the chart to see the exact numbers.

Since Freetech Road Recycling Technology (Holdings) is no giant, with a market capitalization of HK$324m, so you should definitely check its cash and debt before getting too excited about its prospects.

Are Freetech Road Recycling Technology (Holdings) Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that Freetech Road Recycling Technology (Holdings) insiders own a significant number of shares certainly appeals to me. In fact, they own 53% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. To me this is a good sign because it suggests they will be incentivised to build value for shareholders over the long term. With that sort of holding, insiders have about HK$172m riding on the stock, at current prices. That's nothing to sneeze at!

Should You Add Freetech Road Recycling Technology (Holdings) To Your Watchlist?

Freetech Road Recycling Technology (Holdings)'s earnings per share growth have been levitating higher, like a mountain goat scaling the Alps. That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company. The hope is, of course, that the strong growth marks a fundamental improvement in the business economics. So yes, on this short analysis I do think it's worth considering Freetech Road Recycling Technology (Holdings) for a spot on your watchlist. You still need to take note of risks, for example - Freetech Road Recycling Technology (Holdings) has 1 warning sign we think you should be aware of.

You can invest in any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies 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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