China Ruifeng Renewable Energy Holdings (HKG:527) hikes 12% this week, taking one-year gains to 196%

When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the China Ruifeng Renewable Energy Holdings Limited (HKG:527) share price had more than doubled in just one year - up 196%. Also pleasing for shareholders was the 180% gain in the last three months. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. Zooming out, the stock is actually down 24% in the last three years.

Since the stock has added HK$133m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for China Ruifeng Renewable Energy Holdings

Given that China Ruifeng Renewable Energy 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 desire strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

In the last year China Ruifeng Renewable Energy Holdings saw its revenue grow by 3.9%. 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 196%. 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.

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

This free interactive report on China Ruifeng Renewable Energy Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's good to see that China Ruifeng Renewable Energy Holdings has rewarded shareholders with a total shareholder return of 196% in the last twelve months. Notably the five-year annualised TSR loss of 5% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. 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. Even so, be aware that China Ruifeng Renewable Energy Holdings is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

Of course China Ruifeng Renewable Energy Holdings 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 Hong Kong exchanges.

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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.