Investing in the stock market can be straightforward with index funds, but there’s potential for higher returns if you select the right individual stocks. Take, for instance, Heeton Holdings Limited (SGX:5DP), which has seen its share price surge by 36% over the last three years, outperforming the market’s return of approximately 8.1% (excluding dividends).

The recent strong performance of Heeton Holdings warrants a deeper look into its long-term fundamentals. While the company hasn’t reported profits in the past year, a strong correlation between its share price and earnings per share (EPS) is unlikely. Therefore, it’s essential to consider revenue trends. Companies without profits are generally expected to exhibit consistent revenue growth, as this is an indicator of sustainability.

Over the past three years, Heeton Holdings’ revenue has grown by an impressive 26% annually, surpassing the average pre-profit company. The share price has also climbed by 11% each year during this period, which appears to align with the revenue growth. This could make Heeton Holdings an interesting prospect, particularly if it continues on a path toward profitability.

In addition to share price returns, it’s crucial to evaluate the total shareholder return (TSR), which accounts for dividends and other factors. Over the last three years, Heeton Holdings has achieved a TSR of 40%, surpassing the mentioned share price return. The dividends paid by the company have contributed significantly to the total shareholder return.

Looking at the past year, while the broader market gained around 3.4%, Heeton Holdings shareholders experienced a 7.5% loss, even after factoring in dividends. It’s worth noting that even good stocks can face declines, but focusing on fundamental business metrics is essential. Last year’s performance may signal lingering challenges, as it was worse than the annualized loss of 4% over the past five years. It’s important to conduct a thorough analysis of a company’s quality before considering investments, taking into account not only market conditions but also other critical factors.

For a more in-depth examination of Heeton Holdings, start with an assessment of its balance sheet strength in a free interactive report. Additionally, consider exploring a list of intriguing companies with a history of earnings growth and future forecasts if Heeton Holdings doesn’t align with your investment objectives.

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