If You Had Bought Xenon Pharmaceuticals (NASDAQ:XENE) Shares Three Years Ago You'd Have Earned 316% Returns
For us, stock picking is in large part the hunt for the truly magnificent stocks. Mistakes are inevitable, but a single top stock pick can cover any losses, and so much more. For example, the Xenon Pharmaceuticals Inc. (NASDAQ:XENE) share price is up a whopping 316% in the last three years, a handsome return for long term holders. On top of that, the share price is up 29% in about a quarter. But this move may well have been assisted by the reasonably buoyant market (up 14% in 90 days).
View our latest analysis for Xenon Pharmaceuticals
Xenon Pharmaceuticals 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. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years Xenon Pharmaceuticals has grown its revenue at 105% annually. That's much better than most loss-making companies. And it's not just the revenue that is taking off. The share price is up 61% per year in that time. It's always tempting to take profits after a share price gain like that, but high-growth companies like Xenon Pharmaceuticals can sometimes sustain strong growth for many years. So we'd recommend you take a closer look at this one, or even put it on your watchlist.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Xenon Pharmaceuticals shareholders are down 14% for the year, but the market itself is up 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 16%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should be aware of the 3 warning signs we've spotted with Xenon Pharmaceuticals .
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
