Unless you borrow money to invest, the potential losses are limited. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! Take, for example American Superconductor Corporation (NASDAQ:AMSC). Its share price is already up an impressive 230% in the last twelve months. And in the last month, the share price has gained 13%. Also impressive, the stock is up 68% over three years, making long term shareholders happy, too.
The past week has proven to be lucrative for American Superconductor investors, so let's see if fundamentals drove the company's one-year performance.
Because American Superconductor 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. When a company doesn't make profits, we'd generally hope to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
American Superconductor grew its revenue by 37% last year. We respect that sort of growth, no doubt. The revenue growth is decent but the share price had an even better year, gaining 230%. If the profitability is on the horizon then now could be a very exciting time to be a shareholder. Of course, we are always cautious about succumbing to 'fear of missing out' when a stock has shot up strongly.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
Take a more thorough look at American Superconductor's financial health with this free report on its balance sheet.
A Different Perspective
It's good to see that American Superconductor has rewarded shareholders with a total shareholder return of 230% in the last twelve months. That's better than the annualised return of 26% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. Take risks, for example - American Superconductor has 2 warning signs we think you should be aware of.
If you are like me, then you will not want to miss this free list of undervalued small caps 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 American 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.