Yahoo Finance China Nonferrous Gold's (LON:CNG) growing losses don't faze investors as the stock hikes 11% this past week
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For instance the China Nonferrous Gold Limited (LON:CNG) share price is 143% higher than it was three years ago. How nice for those who held the stock! It's also up 20% in about a month.
Since the stock has added US$3.7m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
Check out our latest analysis for China Nonferrous Gold
Because China Nonferrous Gold 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
In the last 3 years China Nonferrous Gold saw its revenue grow at 70% per year. That's much better than most loss-making companies. Meanwhile, the share price performance has been pretty solid at 34% compound over three years. But it does seem like the market is paying attention to strong revenue growth. Nonetheless, we'd say China Nonferrous Gold is still worth investigating - successful businesses can often keep growing for long periods.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. It might be well worthwhile taking a look at our free report on China Nonferrous Gold's earnings, revenue and cash flow.
A Different Perspective
Investors in China Nonferrous Gold had a tough year, with a total loss of 22%, against a market gain of about 29%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For example, we've discovered 4 warning signs for China Nonferrous Gold (2 are potentially serious!) that you should be aware of before investing here.
For those who like to find winning investments this free list of growing 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 GB exchanges.
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.
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