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The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But if you buy shares in a really great company, you can more than double your money. For example, the Raiz Invest Limited (ASX:RZI) share price has soared 270% in the last three years. That sort of return is as solid as granite. We note the stock price is up 1.4% in the last seven days.
Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.
Given that Raiz Invest didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Generally speaking, companies without profits are expected to grow revenue every year, and at a good clip. That's because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over the last three years Raiz Invest has grown its revenue at 46% annually. That's well above most pre-profit companies. Along the way, the share price gained 55% per year, a solid pop by our standards. This suggests the market has recognized the progress the business has made, at least to a significant degree. Nonetheless, we'd say Raiz Invest is still worth investigating - successful businesses can often keep growing for long periods.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide to the business. You can see what analysts are predicting for Raiz Invest in this interactive graph of future profit estimates.
A Different Perspective
Pleasingly, Raiz Invest's total shareholder return last year was 82%. That's better than the annualized TSR of 55% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 1 warning sign for Raiz Invest you should be aware of.
Raiz Invest is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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.