By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. Just take a look at Glaukos Corporation (NYSE:GKOS), which is up 84%, over three years, soundly beating the market return of 40% (not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 8.8%.
Because Glaukos is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. 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 Glaukos has grown its revenue at 23% annually. That's well above most pre-profit companies. While the compound gain of 23% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Glaukos on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
If you are thinking of buying or selling Glaukos stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Glaukos produced a TSR of 8.8% over the last year. Unfortunately this falls short of the market return of around 13%. But the (superior) three-year TSR of 23% per year is some consolation. Even the best companies don't see strong share price performance every year. 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.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.