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The simplest way to invest in stocks is to buy exchange traded funds. But you can significantly boost your returns by picking above-average stocks. To wit, the NI Holdings, Inc. (NASDAQ:NODK) share price is 12% higher than it was a year ago, much better than the market return of around 0.6% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Note that businesses generally develop over the long term, so the returns over the last year might not reflect a long term trend.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the last year NI Holdings grew its earnings per share (EPS) by 123%. It's fair to say that the share price gain of 12% did not keep pace with the EPS growth. Therefore, it seems the market isn't as excited about NI Holdings as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.69.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
Dive deeper into NI Holdings's key metrics by checking this interactive graph of NI Holdings's earnings, revenue and cash flow.
A Different Perspective
NI Holdings boasts a total shareholder return of 12% for the last year. A substantial portion of that gain has come in the last three months, with the stock up 12% in that time. This suggests the company is continuing to win over new investors. Before spending more time on NI Holdings it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.