Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit.But as Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.” data-reactid=”18″>Like a puppy chasing its tail, some new investors often chase ‘the next big thing’, even if that means buying ‘story stocks’ without revenue, let alone profit.But as Warren Buffett has mused, ‘If you’ve been playing poker for half an hour and you still don’t know who the patsy is, you’re the patsy.’ When they buy such story stocks, investors are all too often the patsy.If, on the other hand, you like companies that have revenue, and even earn profits, then you may well be interested in TCL Electronics Holdings ( HKG:1070 ).
Now, I’m not saying that the stock is necessarily undervalued today; but I can’t shake an appreciation for the profitability of the business itself.Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.TCL Electronics Holdings How Quickly Is TCL Electronics Holdings Increasing Earnings Per Share? The market is a voting machine in the short term, but a weighing machine in the long term, so share price follows earnings per share (EPS) eventually.
That makes EPS growth an attractive quality for any company.
Who among us would not applaud TCL Electronics Holdings’s stratospheric annual EPS growth of 55%, compound, over the last three years? That sort of growth never lasts long, but like a shooting star it is well worth watching when it happens.One way to double-check a company’s growth is to look at how its revenue, and earnings margins are changing.
While we note TCL Electronics Holdings’s EBIT margins were flat over the last year, revenue grew by a solid 5.4% to HK$47b.That’s a real positive.You can take a look at the company’s revenue and earnings growth trend, in the chart below.To see the actual numbers, click on the chart.You don’t drive with your eyes on the rear-view mirror, so you might be more interested in this free report showing analyst forecasts for TCL Electronics Holdings’s future profits .Are TCL Electronics Holdings Insiders Aligned With All Shareholders? It makes me feel more secure owning shares in a company if insiders also own shares, thusly more closely aligning our interests.
As a result, I’m encouraged by the fact that insiders own TCL Electronics Holdings shares worth a considerable sum.To be specific, they have HK$264m worth of shares.That shows significant buy-in, and may indicate conviction in the business strategy.Even though that’s only about 2.8% of the company, it’s enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Does TCL Electronics Holdings Deserve A Spot On Your Watchlist? TCL Electronics Holdings’s earnings have taken off like any random crypto-currency did, back in 2017.That sort of growth is nothing short of eye-catching, and the large investment held by insiders certainly brightens my view of the company.At times fast EPS growth is a sign the business has reached an inflection point; and I do like those.So to my mind TCL Electronics Holdings is worth putting on your watchlist; after all, shareholders do well when the market underestimates fast growing companies.
While we’ve looked at the quality of the earnings, we haven’t yet done any work to value the stock.So if you like to buy cheap, you may want to check if TCL Electronics Holdings is trading on a high P/E or a low P/E , relative to its industry.Although TCL Electronics Holdings certainly looks good to me, I would like it more if insiders were buying up shares.If you like to see insider buying, too, then this free list of growing companies that insiders are buying , could be exactly what you’re looking for.Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction .
