By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. For example, Huasu Holdings Co.,Ltd (SZSE:000509) shareholders have seen the share price rise 74% over three years, well in excess of the market decline (14%, not including dividends).

Since the stock has added CN¥472m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

View our latest analysis for Huasu HoldingsLtd

Given that Huasu HoldingsLtd 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. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

Huasu HoldingsLtd's revenue trended up 94% each year over three years. That's much better than most loss-making companies. The share price rise of 20% per year throughout that time is nice to see, and given the revenue growth, that gain seems somewhat justified. If that's the case, now might be the time to take a close look at Huasu HoldingsLtd. A window of opportunity may reveal itself with time, if the business can trend to profitability.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

A Different Perspective

While it's never nice to take a loss, Huasu HoldingsLtd shareholders can take comfort that their trailing twelve month loss of 6.9% wasn't as bad as the market loss of around 11%. Of course, the long term returns are far more important and the good news is that over five years, the stock has returned 4% for each year. In the best case scenario the last year is just a temporary blip on the journey to a brighter future. It's always interesting to track share price performance over the longer term. But to understand Huasu HoldingsLtd better, we need to consider many other factors. Even so, be aware that Huasu HoldingsLtd is showing 1 warning sign in our investment analysis , you should know about...

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.