Taking the occasional loss comes part and parcel with investing on the stock market. Unfortunately, shareholders of Titan Mining Corporation (TSE:TI) have suffered share price declines over the last year. To wit the share price is down 68% in that time. Titan Mining may have better days ahead, of course; we’ve only looked at a one year period. Furthermore, it’s down 36% in about a quarter. That’s not much fun for holders. However, one could argue that the price has been influenced by the general market, which is down 25% in the same timeframe.
With just US$1,074,000 worth of revenue in twelve months, we don’t think the market considers Titan Mining to have proven its business plan. This state of affairs suggests that venture capitalists won’t provide funds on attractive terms. As a result, we think it’s unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, investors may be hoping that Titan Mining finds some valuable resources, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. It certainly is a dangerous place to invest, as Titan Mining investors might realise.
Titan Mining had liabilities exceeding cash by US$52m when it last reported in December 2019, according to our data. That puts it in the highest risk category, according to our analysis. But with the share price diving 68% in the last year , it’s probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Titan Mining’s cash levels have changed over time.
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’d like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.
A Different Perspective
We doubt Titan Mining shareholders are happy with the loss of 68% over twelve months. That falls short of the market, which lost 21%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. With the stock down 36% over the last three months, the market doesn’t seem to believe that the company has solved all its problems. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. 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. Take risks, for example – Titan Mining has 5 warning signs we think you should be aware of.
There are plenty of other companies that have insiders buying up shares. You probably do 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 CA exchanges.
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