These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). For example, the Aspermont Limited (ASX:ASP) share price is up 33% in the last year, clearly besting the market return of around 14% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! The longer term returns have not been as good, with the stock price only 9.1% higher than it was three years ago.
Because Aspermont is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Aspermont grew its revenue by 27% last year. We respect that sort of growth, no doubt. Buyers pushed the share price 33% in response, which isn't unreasonable. If revenue stays on trend, there may be plenty more share price gains to come. But before deciding this growth stock is underappreciated, you might want to check out profitability trends (and cash flow)
You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).
Take a more thorough look at Aspermont's financial health with this free report on its balance sheet.
A Different Perspective
Pleasingly, Aspermont's total shareholder return last year was 33%. That's better than the annualized TSR of 2.9% over the last three years. Given the track record of solid returns over varying time frames, it might be worth putting Aspermont on your watchlist. You could get a better understanding of Aspermont's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course Aspermont 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 AU exchanges.
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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.