Black Cat Syndicate (ASX:BC8) delivers shareholders impressive 202% return over 1 year, surging 22% in the last week alone

Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Black Cat Syndicate Limited (ASX:BC8) share price had more than doubled in just one year - up 202%. Also pleasing for shareholders was the 33% gain in the last three months. However, the stock hasn't done so well in the longer term, with the stock only up 12% in three years.

Since the stock has added AU$71m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

See our latest analysis for Black Cat Syndicate

With just AU$4,610,000 worth of revenue in twelve months, we don't think the market considers Black Cat Syndicate to have proven its business plan. 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 Black Cat Syndicate finds some valuable resources, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that the company needed to issue more shares recently so that it could raise enough money to continue pursuing its business plan. While some companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Black Cat Syndicate investors might know.

Black Cat Syndicate had liabilities exceeding cash when it last reported, according to our data. That put it in the highest risk category, according to our analysis. So the fact that the stock is up 73% in the last year shows that the cash injection was a welcome one. Investors must really like its potential. You can see in the image below, how Black Cat Syndicate's cash levels have changed over time (click to see the values).

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.

A Different Perspective

It's nice to see that Black Cat Syndicate shareholders have received a total shareholder return of 202% over the last year. That gain is better than the annual TSR over five years, which is 16%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Black Cat Syndicate better, we need to consider many other factors. Take risks, for example - Black Cat Syndicate has 3 warning signs (and 2 which can't be ignored) we think you should know about.

Black Cat Syndicate is not the only stock insiders are buying. So take a peek at this free list of small cap companies at attractive valuations which insiders have been buying.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.