If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Avadh Sugar & Energy Limited (NSE:AVADHSUGAR) share price is 13% higher than it was a year ago, much better than the market return of around -2.8% (not including dividends) in the same period. So that should have shareholders smiling. We'll need to follow Avadh Sugar & Energy for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
Because Avadh Sugar & Energy is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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.
In the last year Avadh Sugar & Energy saw its revenue shrink by 17%. Despite the lack of revenue growth, the stock has returned a solid 13% the last twelve months. We can correlate the share price rise with revenue or profit growth, but it seems the market had previously expected weaker results, and sentiment around the stock is improving.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
Avadh Sugar & Energy boasts a total shareholder return of 14% for the last year(that includes the dividends). And the share price momentum remains respectable, with a gain of 19% 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.
We will like Avadh Sugar & Energy better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on IN exchanges.
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