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Is Holista CollTech's (ASX:HCT) 228% Share Price Increase Well Justified?

Simply Wall St

When you buy shares in a company, it's worth keeping in mind the possibility that it could fail, and you could lose your money. But on a lighter note, a good company can see its share price rise well over 100%. One great example is Holista CollTech Limited (ASX:HCT) which saw its share price drive 228% higher over five years. Also pleasing for shareholders was the 17% gain in the last three months.

Check out our latest analysis for Holista CollTech

Holista CollTech isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.

For the last half decade, Holista CollTech can boast revenue growth at a rate of 4.0% per year. That's not a very high growth rate considering the bottom line. So we wouldn't have expected to see the share price to have lifted 27% for each year during that time, but that's what happened. Shareholders should be pretty happy with that, although interested investors might want to examine the financial data more closely to see if the gains are really justified. Some might suggest that the sentiment around the stock is rather positive.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

ASX:HCT Income Statement, January 9th 2020

Take a more thorough look at Holista CollTech's financial health with this free report on its balance sheet.

A Different Perspective

We're pleased to report that Holista CollTech shareholders have received a total shareholder return of 41% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 27% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

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 AU exchanges.

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.

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. Thank you for reading.