The five-year returns have been enviable for SiTime (NASDAQ:SITM) shareholders despite underlying losses increasing

We think all investors should try to buy and hold high quality multi-year winners. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held SiTime Corporation (NASDAQ:SITM) shares for the last five years, while they gained 945%. And this is just one example of the epic gains achieved by some long term investors. Also pleasing for shareholders was the 29% gain in the last three months. Anyone who held for that rewarding ride would probably be keen to talk about it.

Since the stock has added US$439m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for SiTime

Because SiTime made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. Some companies are willing to postpone profitability to grow revenue faster, but in that case one would hope for good top-line growth to make up for the lack of earnings.

For the last half decade, SiTime can boast revenue growth at a rate of 13% per year. That's a pretty good long term growth rate. Arguably it's more than reflected in the very strong share price gain of 60% a year over a half a decade. It might not be cheap but a (long-term) growth stock like this is usually well worth taking a closer look at.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

This free interactive report on SiTime's balance sheet strength is a great place to start, if you want to investigate the stock further.

A Different Perspective

It's nice to see that SiTime shareholders have received a total shareholder return of 104% over the last year. That's better than the annualised return of 60% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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. Case in point: We've spotted 3 warning signs for SiTime you should be aware of.

For those who like to find winning investments this free list of undervalued companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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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.