Casella Waste Systems's (NASDAQ:CWST) Wonderful 575% Share Price Increase Shows How Capitalism Can Build Wealth
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For many, the main point of investing in the stock market is to achieve spectacular returns. While not every stock performs well, when investors win, they can win big. Just think about the savvy investors who held Casella Waste Systems, Inc. (NASDAQ:CWST) shares for the last five years, while they gained 575%. And this is just one example of the epic gains achieved by some long term investors. On top of that, the share price is up 20% in about a quarter. But this could be related to the strong market, which is up 14% in the last three months.
Anyone who held for that rewarding ride would probably be keen to talk about it.
Check out our latest analysis for Casella Waste Systems
We don't think that Casella Waste Systems's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
In the last 5 years Casella Waste Systems saw its revenue grow at 4.7% per year. That's not a very high growth rate considering the bottom line. So shareholders should be pretty elated with the 47% increase per year, in that time. We'll tip our hats to that, any day, but the top-line growth isn't particularly impressive when you compare it to other pre-profit companies. It's not immediately obvious to us why the market has been so enthusiastic about the stock, but a more detailed look at revenue and profit trends might reveal why shareholders are optimistic.
Depicted in the graphic below, you'll see revenue and earnings over time. If you want more detail, you can click on the chart itself.
It is of course excellent to see how Casella Waste Systems has grown profits over the years, but the future is more important for shareholders. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
It's nice to see that Casella Waste Systems shareholders have received a total shareholder return of 36% over the last year. Having said that, the five-year TSR of 47% a year, is even better. Before spending more time on Casella Waste Systems it might be wise to click here to see if insiders have been buying or selling shares.
We will like Casella Waste Systems 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 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 editorial-team@simplywallst.com. 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.
