Buying shares in the best businesses can build meaningful wealth for you and your family. And highest quality companies can see their share prices grow by huge amounts. Just think about the savvy investors who held Alexco Resource Corp. (TSE:AXU) shares for the last five years, while they gained 795%. This just goes to show the value creation that some businesses can achieve. Also pleasing for shareholders was the 17% gain in the last three months. But this could be related to the strong market, which is up 12% in the last three months.
We love happy stories like this one. The company should be really proud of that performance!
Because Alexco Resource made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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, Alexco Resource can boast revenue growth at a rate of 16% per year. That's well above most pre-profit companies. Fortunately, the market has not missed this, and has pushed the share price up by 55% per year in that time. It's never too late to start following a top notch stock like Alexco Resource, 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 graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.
A Different Perspective
It's nice to see that Alexco Resource shareholders have received a total shareholder return of 31% over the last year. Having said that, the five-year TSR of 55% a year, is even better. The pessimistic view would be that be that the stock has its best days behind it, but on the other hand the price might simply be moderating while the business itself continues to execute. 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. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Alexco Resource you should know about.
We will like Alexco Resource better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA 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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