By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, Amicus Therapeutics, Inc. (NASDAQ:FOLD) shareholders have seen the share price rise 73% over three years, well in excess of the market return (39%, not including dividends).
Given that Amicus Therapeutics didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. 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.
Over the last three years Amicus Therapeutics has grown its revenue at 86% annually. That's well above most pre-profit companies. While the compound gain of 20% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Amicus Therapeutics on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Amicus Therapeutics is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. You can see what analysts are predicting for Amicus Therapeutics in this interactive graph of future profit estimates.
A Different Perspective
While the broader market gained around 32% in the last year, Amicus Therapeutics shareholders lost 5.7%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Longer term investors wouldn't be so upset, since they would have made 1.2%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on Amicus Therapeutics it might be wise to click here to see if insiders have been buying or selling shares.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
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