Did Changing Sentiment Drive International Samuel Exploration’s (CVE:ISS) Share Price Down A Painful 95%?

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Some stocks are best avoided. It hits us in the gut when we see fellow investors suffer a loss. Imagine if you held International Samuel Exploration Corp. (CVE:ISS) for half a decade as the share price tanked 95%. And we doubt long term believers are the only worried holders, since the stock price has declined 67% over the last twelve months.

We really feel for shareholders in this scenario. It’s a good reminder of the importance of diversification, and it’s worth keeping in mind there’s more to life than money, anyway.

See our latest analysis for International Samuel Exploration

With zero revenue generated over twelve months, we don’t think that International Samuel Exploration has proved its business plan yet. You have to wonder why venture capitalists aren’t funding it. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, investors may be hoping that International Samuel Exploration finds some valuable resources, before it runs out of money.

As a general rule, if a company doesn’t have much revenue, and it loses money, then it is a high risk investment. There is almost always a chance they will need to raise more capital, and their progress – and share price – will dictate how dilutive that is to current holders. While some such companies do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). International Samuel Exploration has already given some investors a taste of the bitter losses that high risk investing can cause.

Our data indicates that International Samuel Exploration had CA$153,589 more in total liabilities than it had cash, when it last reported in March 2019. That makes it extremely high risk, in our view. But since the share price has dived -45% per year, over 5 years, it looks like some investors think it’s time to abandon ship, so to speak. You can see in the image below, how International Samuel Exploration’s cash levels have changed over time (click to see the values).

TSXV:ISS Historical Debt, June 14th 2019
TSXV:ISS Historical Debt, June 14th 2019

Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.

A Different Perspective

While the broader market gained around 0.07% in the last year, International Samuel Exploration shareholders lost 67%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year’s performance caps off a bad run, with the shareholders facing a total loss of 45% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

Of course International Samuel Exploration may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.