Does Tye Soon (SGX:BFU) Deserve A Spot On Your Watchlist?

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

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 Tye Soon (SGX:BFU). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

See our latest analysis for Tye Soon

Tye Soon's Improving Profits

Tye Soon has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Tye Soon's EPS shot up from S$0.051 to S$0.072; a result that's bound to keep shareholders happy. That's a fantastic gain of 41%.

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. Tye Soon maintained stable EBIT margins over the last year, all while growing revenue 11% to S$249m. That's encouraging news for the company!

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Since Tye Soon is no giant, with a market capitalisation of S$31m, you should definitely check its cash and debt before getting too excited about its prospects.

Are Tye Soon Insiders Aligned With All Shareholders?

Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. That's because insider buying often indicates that those closest to the company have confidence that the share price will perform well. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

With strong conviction, Tye Soon insiders have stood united by refusing to sell shares over the last year. But the real excitement comes from the S$171k that MD & Executive Director Tek Yew Chong spent buying shares (at an average price of about S$0.40). Purchases like this clue us in to the to the faith management has in the business' future.

Does Tye Soon Deserve A Spot On Your Watchlist?

You can't deny that Tye Soon has grown its earnings per share at a very impressive rate. That's attractive. Not only is that growth rate rather juicy, but the insider buying adds fuel to the fire. To put it succinctly; Tye Soon is a strong candidate for your watchlist. It is worth noting though that we have found 3 warning signs for Tye Soon (1 can't be ignored!) that you need to take into consideration.

The good news is that Tye Soon is not the only growth stock with insider buying. Here's a list of them... with insider buying in the last three months!

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.