Is Now The Time To Put Enviro-Hub Holdings (SGX:L23) On Your Watchlist?

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

Despite being in the age of tech-stock blue-sky investing, many investors still adopt a more traditional strategy; buying shares in profitable companies like Enviro-Hub Holdings (SGX:L23). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

See our latest analysis for Enviro-Hub Holdings

How Fast Is Enviro-Hub Holdings Growing?

The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. So it makes sense that experienced investors pay close attention to company EPS when undertaking investment research. Enviro-Hub Holdings managed to grow EPS by 8.7% per year, over three years. That growth rate is fairly good, assuming the company can keep it up.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. The good news is that Enviro-Hub Holdings is growing revenues, and EBIT margins improved by 7.4 percentage points to 10%, over the last year. That's great to see, on both counts.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Since Enviro-Hub Holdings is no giant, with a market capitalisation of S$74m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Enviro-Hub Holdings Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Enviro-Hub Holdings top brass are certainly in sync, not having sold any shares, over the last year. But the bigger deal is that the Executive Chairman, Ah Ng, paid S$115k to buy shares at an average price of S$0.058. It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

On top of the insider buying, we can also see that Enviro-Hub Holdings insiders own a large chunk of the company. To be exact, company insiders hold 71% of the company, so their decisions have a significant impact on their investments. This should be seen as a good thing, as it means insiders have a personal interest in delivering the best outcomes for shareholders. In terms of absolute value, insiders have S$53m invested in the business, at the current share price. So there's plenty there to keep them focused!

Should You Add Enviro-Hub Holdings To Your Watchlist?

As previously touched on, Enviro-Hub Holdings is a growing business, which is encouraging. On top of that, we've seen insiders buying shares even though they already own plenty. That should do plenty in prompting budding investors to undertake a bit more research - or even adding the company to their watchlists. Even so, be aware that Enviro-Hub Holdings is showing 4 warning signs in our investment analysis , and 1 of those is significant...

There are plenty of other companies that have insiders buying up shares. So if you like the sound of Enviro-Hub Holdings, you'll probably love this free list of growing companies that insiders are buying.

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

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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.