Riverstone Holdings Limited’s Stock Is Up 13% In The Past 30 Days: Here’s Why

Riverstone Holdings Limited (SGX: AP4) is a Malaysia-based company that produces rubber gloves for both the cleanroom and healthcare industries.

Over the last 30 days, Riverstone has seen its stock price climb 13%. The bulk of those gains came last Friday, when Riverstone’s share price rose 9% from S$0.88 to S$0.96. Why is that the case?

Reasons for a gain

There are many reasons why a stock’s price would rise.

But, the reasons can generally be classified as business-performance-related, or investor-sentiment-related. The former deals with how a stock’s business has performed or is expected to perform. And in terms of business performance, one of the really important numbers would be the stock’s profit.

Meanwhile, the latter is about the overall mood of market participants – are investors more greedy than fearful, more pessimistic than optimistic et cetera? In general, negative emotions (fear and pessimism) tend to drag down the prices of stocks while positive emotions (greed and optimism) tend to push up stock prices.

The case with Riverstone

I believe it’s the former at work when it comes to Riverstone. Here’re some important numbers from Riverstone’s income statement for the first quarters of 2017 and 2016 to justify my point:

Source: Riverstone 2017 first quarter earnings release

It’s obvious that Riverstone had enjoyed a great quarter, with strong double-digit growth in both revenue and net profit.

Going forward, the company could potentially grow its revenue materially. At the end of 2016, Riverstone had an annual production capacity of 6.2 billion gloves. It aims to hit a production capacity of 10 billion gloves per year by the end of 2019.

But, investors should also note that Riverstone’s bottom-line growth may be less certain, given that the company is exposed to factors such as raw material price fluctuations, currency risks, and pricing risks due to competition. All these factors are not really within the control of management.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Riverstone Holdings. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.