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. Just take a look at Hunan Copote Science Technology Co.,Ltd. (SHSE:600476), which is up 64%, over three years, soundly beating the market decline of 14% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 27% in the last year.

Since the stock has added CN¥427m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Hunan Copote Science TechnologyLtd

Hunan Copote Science TechnologyLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last 3 years Hunan Copote Science TechnologyLtd saw its revenue grow at 23% per year. That's well above most pre-profit companies. While the compound gain of 18% per year over three years is pretty good, you might argue it doesn't fully reflect the strong revenue growth. So now might be the perfect time to put Hunan Copote Science TechnologyLtd on your radar. A window of opportunity may reveal itself with time, if the business can trend to profitability.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

A Different Perspective

It's good to see that Hunan Copote Science TechnologyLtd has rewarded shareholders with a total shareholder return of 27% in the last twelve months. That's better than the annualised return of 7% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Hunan Copote Science TechnologyLtd (at least 1 which makes us a bit uncomfortable) , and understanding them should be part of your investment process.

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.