In This Article:
We think all investors should try to buy and hold high quality multi-year winners. While the best companies are hard to find, but they can generate massive returns over long periods. Just think about the savvy investors who held Rectifier Technologies Limited (ASX:RFT) shares for the last five years, while they gained 1500%. This just goes to show the value creation that some businesses can achieve. In more good news, the share price has risen -4.0% in thirty days.
We love happy stories like this one. The company should be really proud of that performance!
See our latest analysis for Rectifier Technologies
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the five years of share price growth, Rectifier Technologies moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here. Given that the company made a profit three years ago, but not five years ago, it is worth looking at the share price returns over the last three years, too. Indeed, the Rectifier Technologies share price has gained 433% in three years. During the same period, EPS grew by 11% each year. This EPS growth is lower than the 75% average annual increase in the share price over three years. So it's fair to assume the market has a higher opinion of the business than it did three years ago.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
It might be well worthwhile taking a look at our free report on Rectifier Technologies's earnings, revenue and cash flow.
A Different Perspective
It's nice to see that Rectifier Technologies shareholders have received a total shareholder return of 140% over the last year. That's better than the annualised return of 74% 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. Before forming an opinion on Rectifier Technologies you might want to consider these 3 valuation metrics.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).