While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When you buy and hold the right company, the returns can make a huge difference to both you and your family. For example, Pacific Edge Limited (NZSE:PEB) has generated a beautiful 750% return in just a single year. Looking back further, the stock price is 158% higher than it was three years ago.
It really delights us to see such great share price performance for investors.
Pacific Edge wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over the last twelve months, Pacific Edge's revenue grew by 28%. That's a fairly respectable growth rate. But the market is even more excited about it, with the price apparently bound for the moon, up 750% in one of earth's orbits. While we are always careful about jumping on a hot stock too late, there's certainly good reason to keep an eye on Pacific Edge.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Pacific Edge stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's good to see that Pacific Edge has rewarded shareholders with a total shareholder return of 750% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 14% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Pacific Edge better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Pacific Edge you should know about.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NZ 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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Pacific Edge Limited, a cancer diagnostic company, researches, develops, and commercializes diagnostic and prognostic tools for the early detection and management of cancers in New Zealand, the United States, Australia, and Singapore.
Flawless balance sheet with limited growth.