In the search for multi-bagger stocks, it’s important to identify underlying trends in a business that indicate future growth. One key factor to consider is the return on capital employed (ROCE), which measures the profitability of a company’s capital investments. Beijing Energy International Holding (HKG:686), however, does not appear to have the makings of a multi-bagger stock.
ROCE is calculated by dividing earnings before interest and tax (EBIT) by the difference between total assets and current liabilities. For Beijing Energy International Holding, the ROCE stands at 4.4%. This is significantly lower than the industry average of 7.2% in the Renewable Energy sector.
Analyzing historical performance, Beijing Energy International Holding has consistently earned a 4.4% return on capital over the past five years. Additionally, the capital employed in the business has increased by 141% during that time. This suggests that the company’s investments have not generated a high return on capital.
Furthermore, the stock has declined by 36% in the last five years, indicating a lack of optimism among investors regarding future prospects. The inherent trends in Beijing Energy International Holding do not align with those typically found in multi-bagger stocks.
It is important to consider the risks associated with any investment. In the case of Beijing Energy International Holding, there are three warning signs to be aware of, one of which is particularly concerning.
In conclusion, Beijing Energy International Holding has not demonstrated the potential for significant future growth and therefore may not be a suitable choice for investors seeking multi-bagger stocks. It is advised to explore other opportunities with more promising trends.
Note: This article is based on historical data and analyst forecasts and should not be considered as financial advice. It does not take into account individual objectives or financial situations.