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The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. For example, the First Majestic Silver Corp. (TSE:FR) share price is up 16% in the last year, clearly besting than the market return of around 2.5% (not including dividends). That’s a solid performance by our standards! However, the longer term returns haven’t been so impressive, with the stock up just 7.2% in the last three years.
First Majestic Silver isn’t currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn’t make profits, we’d generally expect to see good 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 First Majestic Silver saw its revenue grow by 19%. That’s a fairly respectable growth rate. While the share price performed well, gaining 16% over twelve months, you could argue the revenue growth warranted something better. If the company can maintain the revenue growth, the share price could go higher still. But it’s crucial to check profitability and cash flow before forming a view on the future.
The chart below shows how revenue and earnings have changed with time, (if you click on the chart you can see the actual values).
It’s probably worth noting we’ve seen significant insider buying in the last quarter, which we consider a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. So it makes a lot of sense to check out what analysts think First Majestic Silver will earn in the future (free profit forecasts)
A Different Perspective
We’re pleased to report that First Majestic Silver shareholders have received a total shareholder return of 16% over one year. That certainly beats the loss of about 2.8% per year over the last half decade. This makes us a little wary, but the business might have turned around its fortunes. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
First Majestic Silver is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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 email@example.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.