By buying an index fund, you can roughly match the market return with ease. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Hong Kong ChaoShang Group Limited (HKG:2322), which is up 58%, over three years, soundly beating the market decline of 14% (not including dividends).
After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals.
View our latest analysis for Hong Kong ChaoShang Group
Because Hong Kong ChaoShang Group 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 it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
Hong Kong ChaoShang Group's revenue trended up 16% each year over three years. That's pretty nice growth. While the share price has done well, compounding at 17% yearly, over three years, that move doesn't seem over the top. Of course, valuation is quite sensitive to the rate of growth. Of course, it's always worth considering funding risks when a company isn't profitable.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).SEHK:2322 Earnings and Revenue Growth May 13th 2022
If you are thinking of buying or selling Hong Kong ChaoShang Group stock, you should check out this FREE detailed report on its balance sheet .
A Different Perspective
While it's certainly disappointing to see that Hong Kong ChaoShang Group shares lost 4.0% throughout the year, that wasn't as bad as the market loss of 22%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 3% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. Shareholders might want to examine this detailed historical graph of past earnings, revenue and cash flow.
Of course Hong Kong ChaoShang Group may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.