Some stocks are best avoided. We really hate to see fellow investors lose their hard-earned money. Spare a thought for those who held Global Strategic Group Limited (HKG:8007) for five whole years – as the share price tanked 99%. And it’s not just long term holders hurting, because the stock is down 90% in the last year. Furthermore, it’s down 79% in about a quarter. That’s not much fun for holders.
We really feel for shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind there’s more to life than money, anyway.
See our latest analysis for Global Strategic Group
Given that Global Strategic Group didn’t make a profit in the last twelve months, we’ll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because fast revenue growth can be easily extrapolated to forecast profits, often of considerable size.
Over five years, Global Strategic Group grew its revenue at 24% per year. That’s well above most other pre-profit companies. So it’s not at all clear to us why the share price sunk 60% throughout that time. You’d have to assume the market is worried that profits won’t come soon enough. While there might be an opportunity here, you’d want to take a close look at the balance sheet strength.
The company’s revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).
SEHK:8007 Income Statement April 1st 2020
This free interactive report on Global Strategic Group’s balance sheet strength is a great place to start, if you want to investigate the stock further.
A Different Perspective
We regret to report that Global Strategic Group shareholders are down 90% for the year. Unfortunately, that’s worse than the broader market decline of 18%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there’s a good opportunity. Unfortunately, last year’s performance may indicate unresolved challenges, given that it was worse than the annualised loss of 60% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It’s always interesting to track share price performance over the longer term. But to understand Global Strategic Group better, we need to consider many other factors. Like risks, for instance. Every company has them, and we’ve spotted 5 warning signs for Global Strategic Group (of which 2 are a bit unpleasant!) you should know about.
But note: Global Strategic Group may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on HK exchanges.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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. Thank you for reading.