Should You Be Adding Yangarra Resources (TSE:YGR) To Your Watchlist Today?
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. 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 Yangarra Resources (TSE:YGR). 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 Yangarra Resources
How Fast Is Yangarra Resources Growing?
If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that Yangarra Resources has managed to grow EPS by 37% per year over three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming.
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. Yangarra Resources shareholders can take confidence from the fact that EBIT margins are up from 61% to 64%, and revenue is growing. 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.
The trick, as an investor, is to find companies that are going to perform well in the future, not just in the past. While crystal balls don't exist, you can check our visualization of consensus analyst forecasts for Yangarra Resources' future EPS 100% free.
Are Yangarra Resources Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
Despite CA$11k worth of sales, Yangarra Resources insiders have overwhelmingly been buying the stock, spending CA$623k on purchases in the last twelve months. An optimistic sign for those with Yangarra Resources in their watchlist. Zooming in, we can see that the biggest insider purchase was by President Gurdeep Gill for CA$117k worth of shares, at about CA$2.54 per share.
On top of the insider buying, it's good to see that Yangarra Resources insiders have a valuable investment in the business. As a matter of fact, their holding is valued at CA$21m. This considerable investment should help drive long-term value in the business. That amounts to 13% of the company, demonstrating a degree of high-level alignment with shareholders.
Is Yangarra Resources Worth Keeping An Eye On?
If you believe that share price follows earnings per share you should definitely be delving further into Yangarra Resources' strong EPS growth. Furthermore, company insiders have been adding to their significant stake in the company. So it's fair to say that this stock may well deserve a spot on your watchlist. You should always think about risks though. Case in point, we've spotted 1 warning sign for Yangarra Resources you should be aware of.
There are plenty of other companies that have insiders buying up shares. So if you like the sound of Yangarra Resources, 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
