Should You Be Adding CYL Corporation Berhad (KLSE:CYL) To Your Watchlist Today?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But as Warren Buffett has mused, 'If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy.' When they buy such story stocks, investors are all too often the patsy.

In the age of tech-stock blue-sky investing, my choice may seem old fashioned; I still prefer profitable companies like CYL Corporation Berhad (KLSE:CYL). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. In comparison, loss making companies act like a sponge for capital - but unlike such a sponge they do not always produce something when squeezed.

See our latest analysis for CYL Corporation Berhad

How Quickly Is CYL Corporation Berhad Increasing Earnings Per Share?

The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually. That means EPS growth is considered a real positive by most successful long-term investors. CYL Corporation Berhad managed to grow EPS by 12% per year, over three years. That's a pretty good rate, if the company can sustain it.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). I note that CYL Corporation Berhad's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. While CYL Corporation Berhad's EBIT margins are down, it's not all bad news as revenues are, at least, stable. Does that sound particularly bullish? No, it does not.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

CYL Corporation Berhad isn't a huge company, given its market capitalization of RM60m. That makes it extra important to check on its balance sheet strength.

Are CYL Corporation Berhad Insiders Aligned With All Shareholders?

Personally, I like to see high insider ownership of a company, since it suggests that it will be managed in the interests of shareholders. So as you can imagine, the fact that CYL Corporation Berhad insiders own a significant number of shares certainly appeals to me. In fact, they own 82% 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. Valued at only RM60m CYL Corporation Berhad is really small for a listed company. So despite a large proportional holding, insiders only have RM49m worth of stock. That's not a huge stake in absolute terms, but it should help keep insiders aligned with other shareholders.

Does CYL Corporation Berhad Deserve A Spot On Your Watchlist?

As I already mentioned, CYL Corporation Berhad is a growing business, which is what I like to see. Just as polish makes silverware pop, the high level of insider ownership enhances my enthusiasm for this growth. That combination appeals to me, for one. So yes, I do think the stock is worth keeping an eye on. Still, you should learn about the 4 warning signs we've spotted with CYL Corporation Berhad (including 1 which can't be ignored) .

Although CYL Corporation Berhad certainly looks good to me, I would like it more if insiders were buying up shares. If you like to see insider buying, too, then this free list of growing companies that insiders are buying, could be exactly what you're looking for.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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