If you’d bought $5,000 of Lynas shares 5 years ago, guess how much you’d have now

How much would you have pocketed if you had picked Lynas shares five years ago?

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Key points

  • Lynas shares has been hammered over the past month, but are still up over the long run
  • An initial investment of $5,000 in 2017 would have reaped almost $54,000 today
  • The ASX 200 has generated a yearly average return of 4.45% over five years compared to 57% for Lynas shares

Despite falling on hard times recently, the Lynas Rare Earths Ltd (ASX: LYC) share price has been a star performer over the medium-term.

Arguably, investing your money in companies that are new to market or emerging can reap some serious rewards. Of course, there is an inherent risk, particularly given that newcomer ASX growth shares, including this rare earths producer, traditionally lie outside the S&P/ASX 200 Index (ASX: XJO).

Below, we calculate how much you would have made if you’d bought $5,000 worth of Lynas shares five years ago.

How much would your initial investment be worth now?

If you’d invested $5,000 into Lynas shares in 2017, you would have picked them up for approximately 83 cents apiece. This equates to about 6,024 shares without topping up along the way during the retracement periods.

Fast-forward to today, Lynas shares closed at $8.95 on Wednesday. This means that those 6,024 shares would be worth a staggering $53,914.80.

When looking at percentage terms, this implies a gain of 980% or an average yearly return of 60.90%.

In comparison, investing the same amount in an ASX 200 index-tracking fund would have given back 24.30% over five years. This equates to an average of 4.45% per year.

If you are wondering about Lynas’ dividends, the company has chosen not to pay a percentage of its profits to date. Instead, it has decided to invest in its business and keep the balance sheet healthy in times of commodity downturns.

Lynas share price summary

Over the past 12 months, the Lynas share price has travelled more than 57% higher but is down 12% year to date.

The company’s shares hit a 52-week high of $11.59 cents in early April before treading lower in the following weeks.

Lynas presides a market capitalisation of roughly $8.2 billion and has more than 902.41 million shares on its registry.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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