It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money.And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et.al.found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.” data-reactid=”19″>It’s only natural that many investors, especially those who are new to the game, prefer to buy shares in ‘sexy’ stocks with a good story, even if those businesses lose money.And in their study titled Who Falls Prey to the Wolf of Wall Street?’ Leuz et.
al.found that it is ‘quite common’ for investors to lose money by buying into ‘pump and dump’ schemes.
In contrast to all that, I prefer to spend time on companies like Ramsdens Holdings ( LON:RFX ), which has not only revenues, but also profits.
Even if the shares are fully valued today, most capitalists would recognize its profits as the demonstration of steady value generation.Conversely, a loss-making company is yet to prove itself with profit, and eventually the sweet milk of external capital may run sour.Check out our latest analysis for Ramsdens Holdings How Quickly Is Ramsdens Holdings Increasing Earnings Per Share? As one of my mentors once told me, share price follows earnings per share (EPS).It’s no surprise, then, that I like to invest in companies with EPS growth.I, for one, am blown away by the fact that Ramsdens Holdings has grown EPS by 39% per year, over the last three years.Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats).Ramsdens Holdings maintained stable EBIT margins over the last year, all while growing revenue 25% to UK£54m.
That’s a real positive.In the chart below, you can see how the company has grown earnings, and revenue, over time.Click on the chart to see the exact numbers.More Of course the knack is to find stocks that have their best days in the future, not in the past.
You could base your opinion on past performance, of course, but you may also want to check this interactive graph of professional analyst EPS forecasts for Ramsdens Holdings .Are Ramsdens Holdings Insiders Aligned With All Shareholders? Like that fresh smell in the air when the rains are coming, insider buying fills me with optimistic anticipation.That’s because insider buying often indicates that those closest to the company have confidence that the share price will perform well.Of course, we can never be sure what insiders are thinking, we can only judge their actions.
The good news for Ramsdens Holdings shareholders is that no insiders reported selling shares in the last year.
So it’s definitely nice that Non-Executive Chairman Andrew Meehan bought UK£28k worth of shares at an average price of around UK£1.89.Is Ramsdens Holdings Worth Keeping An Eye On? Ramsdens Holdings’s earnings have taken off like any random crypto-currency did, back in 2017.If you’re like me, you’ll find it hard to ignore that sort of explosive EPS growth.And in fact, it could well signal a fundamental shift in the business economics.If that’s the case, you may regret neglecting to put Ramsdens Holdings on your watchlist.
What about risks? Every company has them, and we’ve spotted 3 warning signs for Ramsdens Holdings you should know about.There are plenty of other companies that have insiders buying up shares.
So if you like the sound of Ramsdens Holdings, you’ll probably love this free list of growing companies that insiders are buying.Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.If you spot an error that warrants correction, please contact the editor at .This article by Simply Wall St is general in nature.It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation.Simply Wall St has no position in the stocks mentioned.We aim to bring you long-term focused research analysis driven by fundamental data.Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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