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Long term investing can be life changing when you buy and hold the truly great businesses. While not every stock performs well, when investors win, they can win big. To wit, the Insulet Corporation (NASDAQ:PODD) share price has soared 745% over five years. If that doesn't get you thinking about long term investing, we don't know what will.
We love happy stories like this one. The company should be really proud of that performance!
We don't think that Insulet's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.
In the last 5 years Insulet saw its revenue grow at 23% per year. Even measured against other revenue-focussed companies, that's a good result. Fortunately, the market has not missed this, and has pushed the share price up by 53% per year in that time. It's never too late to start following a top notch stock like Insulet, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Insulet is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Insulet stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
Insulet shareholders gained a total return of 35% during the year. But that return falls short of the market. On the bright side, the longer term returns (running at about 53% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Insulet better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for Insulet (of which 1 is potentially serious!) you should know about.
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 US exchanges.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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