Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. To wit, the Solarvest Holdings Berhad (KLSE:SLVEST) share price is 62% higher than it was a year ago, much better than the market decline of around 0.7% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Solarvest Holdings Berhad hasn't been listed for long, so it's still not clear if it is a long term winner.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year, Solarvest Holdings Berhad actually saw its earnings per share drop 5.3%.
So we don't think that investors are paying too much attention to EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.
We are skeptical of the suggestion that the 1.0% dividend yield would entice buyers to the stock. Unfortunately Solarvest Holdings Berhad's fell 12% over twelve months. So the fundamental metrics don't provide an obvious explanation for the share price gain.
The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
This free interactive report on Solarvest Holdings Berhad's balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
It's nice to see that Solarvest Holdings Berhad shareholders have gained 62% over the last year, including dividends. Unfortunately the share price is down 9.7% over the last quarter. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. 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. Like risks, for instance. Every company has them, and we've spotted 3 warning signs for Solarvest Holdings Berhad (of which 1 is a bit unpleasant!) you should know about.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on MY 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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