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These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. To wit, the Sol-Gel Technologies Ltd. (NASDAQ:SLGL) share price is 49% higher than it was a year ago, much better than the market return of around 4.7% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! We'll need to follow Sol-Gel Technologies for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Sol-Gel Technologies isn't a profitable company, so it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
Over the last twelve months, Sol-Gel Technologies's revenue grew by 2856%. That's well above most other pre-profit companies. The solid 49% share price gain goes down pretty well, but it's not necessarily as good as you might expect given the top notch revenue growth. If that's the case, now might be the time to take a close look at Sol-Gel Technologies. Since we evolved from monkeys, we think in linear terms by nature. So if growth goes exponential, opportunity may exist for the enlightened.
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
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. This free report showing analyst forecasts should help you form a view on Sol-Gel Technologies
A Different Perspective
It's nice to see that Sol-Gel Technologies shareholders have gained 49% over the last year. And the share price momentum remains respectable, with a gain of 36% in the last three months. Demand for the stock from multiple parties is pushing the price higher; it could be that word is getting out about its virtues as a business. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course Sol-Gel Technologies 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 US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.