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If you want to compound wealth in the stock market, you can do so by buying an index fund. But investors can boost returns by picking market-beating companies to own shares in. For example, the Beam Communications Holdings Limited (ASX:BCC) share price is up 94% in the last year, clearly besting than the market return of around 2.5% (not including dividends). If it can keep that out-performance up over the long term, investors will do very well! It is also impressive that the stock is up 36% over three years, adding to the sense that it is a real winner.
See our latest analysis for Beam Communications Holdings
Beam Communications Holdings isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Over the last twelve months, Beam Communications Holdings's revenue grew by 67%. That's a head and shoulders above most loss-making companies. While the share price gain of 94% over twelve months is pretty tasty, you might argue it doesn't fully reflect the strong revenue growth. So quite frankly it could be a good time to investigate Beam Communications Holdings in some detail. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?
You can see how revenue and earnings have changed over time in the image below, (click on the chart to see cashflow).
This free interactive report on Beam Communications Holdings's balance sheet strength is a great place to start, if you want to investigate the stock further.
What about the Total Shareholder Return (TSR)?
Investors should note that there's a difference between Beam Communications Holdings's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. We note that Beam Communications Holdings's TSR, at 94% is higher than its share price return of 94%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.