The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But when you pick a company that is really flourishing, you can make more than 100%. For instance the Tianqi Lithium Corporation (SZSE:002466) share price is 205% higher than it was three years ago. How nice for those who held the stock! It's also up 17% in about a month. But this could be related to good market conditions -- stocks in its market are up 8.6% in the last month.
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
See our latest analysis for Tianqi Lithium
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, Tianqi Lithium moved from a loss to profitability. Given the importance of this milestone, it's not overly surprising that the share price has increased strongly.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
SZSE:002466 Earnings Per Share Growth January 24th 2023
It is of course excellent to see how Tianqi Lithium has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Tianqi Lithium stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
It's nice to see that Tianqi Lithium shareholders have received a total shareholder return of 6.7% over the last year. However, that falls short of the 18% TSR per annum it has made for shareholders, each year, over five years. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Tianqi Lithium is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...
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 CN exchanges.
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