Every now and again, an ASX company emerges that captures the hearts and minds of investors.
It doesn't happen every year, but it certainly happens more often than you think.
From Droneshield (ASX: DRO) to ProMedicus (ASX: PME) to Supply Network (ASX: SNL), these companies have all produced total returns in excess of 700% over the last 5 years.
The latest market darling is, of course, none other than Telix Pharmaceuticals (ASX: TLX).
Just 5 years ago, the company reported revenue of $3.5m and now its 2025 sales guidance is in excess of $1.2 billion (US$785m at the midpoint), a phenomenal 343x increase!
Its share price has done alright, just a lazy 25x increase over the same period.
It's the stuff that dreams are made of, and it reminds us why we love this game of investing.
Now, if you cut out the hype, there are actually important investing lessons to learn from Telix.
Stay optimistic and always look forward
Five years ago, we were in the midst of a pandemic, and the world was facing a lot of uncertainty. (Not much has changed!).
It would have been easy to ignore a small, speculative pharmaceutical company with $3.5m in revenue, but investing is all about looking ahead, imagining all the different possibilities, and pricing them accordingly.
No matter what the headlines say, the share market will surprise you with the opportunities that it can create. Stay optimistic, always look forward.
Business fundamentals matter
A 25x share price return is nice, but the real story here is the 343x increase in sales. Students of the game know how important it is to study the business and its fundamentals.
The context matters too. Sales growth may be important for Telix now as a growth company, but perhaps at some point in the future, earnings per share and free cash flow will become more important metrics.
Tough times will come
Sorry to be the bearer of bad news, but tough times will eventually come. At some point, Telix shareholders will have to deal with a major share price decline. It could be up to a 20% decline, or it could be a lot more.
It happens to every market darling, and it's just the nature of the beast.
The time to mentally prepare yourself and work out what you would do in such a scenario is now. Write down your game plan, explain your rationale, and constantly re-evaluate it using the business fundamentals as your guide. Tough times will eventually come.
You don't need a Telix to do well
Telix's monster returns are worth celebrating; this is a company solving real-world problems after all. But let me be clear: you don't need Telix to do well in the share market.
I say this because it's natural for investors who have missed out on Telix to have that fear of missing out (FOMO). If that's you, remember that there are plenty of opportunities out there.
They won't all do as well as Telix, but even a 2x return in 5 years (just short of a 15% compounded annual growth rate) is a great return.
Find the next Telix
Finally, it's of no use to just look back at Telix's success without applying the lessons to help us find the next Telix. Ultimately, finding winning companies is what this game is all about. That's why we love it.
If you need some help doing that, I know a band of merry Fools who just might be able to help…
