For us, stock picking is in large part the hunt for the truly magnificent stocks. But when you hold the right stock for the right time period, the rewards can be truly huge. For example, the Serko Limited (NZSE:SKO) share price is up a whopping 581% in the last three years, a handsome return for long term holders. In more good news, the share price has risen 9.3% in thirty days.
It really delights us to see such great share price performance for investors.
Serko isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years Serko has grown its revenue at 21% annually. That's well above most pre-profit companies. And it's not just the revenue that is taking off. The share price is up 90% per year in that time. Despite the strong run, top performers like Serko have been known to go on winning for decades. So we'd recommend you take a closer look at this one, or even put it on your watchlist.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Take a more thorough look at Serko's financial health with this free report on its balance sheet.
A Different Perspective
It's nice to see that Serko shareholders have received a total shareholder return of 12% over the last year. However, the TSR over five years, coming in at 42% per year, is even more impressive. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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 Serko is showing 2 warning signs in our investment analysis , you should know about...
Of course Serko 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 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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