Alterity Therapeutics (ASX:ATH) jumps 100% this week, taking one-year gains to 260%
The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you pick the right stock, you can make a lot more than 100%. Take, for example Alterity Therapeutics Limited (ASX:ATH). Its share price is already up an impressive 260% in the last twelve months. It's up an even more impressive 500% over the last quarter. Zooming out, the stock is actually down 14% in the last three years.
The past week has proven to be lucrative for Alterity Therapeutics investors, so let's see if fundamentals drove the company's one-year performance.
Check out our latest analysis for Alterity Therapeutics
With just AU$4,019,285 worth of revenue in twelve months, we don't think the market considers Alterity Therapeutics to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Alterity Therapeutics has the funding to invent a new product before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. We can see that they needed to raise more capital, and took that step recently despite the fact that it would have been dilutive 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). Alterity Therapeutics has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
When it last reported, Alterity Therapeutics had minimal cash in excess of all liabilities. So it is a good thing that the company has looked to remedy the situation by raising more capital recently. Given the current cash position, investors must really like its potential for the share price to be up 64% in the last year. The image below shows how Alterity Therapeutics' balance sheet has changed over time; if you want to see the precise values, simply click on the image.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. However you can take a look at whether insiders have been buying up shares. If they are buying a significant amount of shares, that's certainly a good thing. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
We're pleased to report that Alterity Therapeutics shareholders have received a total shareholder return of 260% over one year. Notably the five-year annualised TSR loss of 1.0% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Case in point: We've spotted 6 warning signs for Alterity Therapeutics you should be aware of, and 3 of them are potentially serious.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
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.
About ASX:ATH
Alterity Therapeutics
Engages in the research and development of therapeutic drugs to treat Alzheimer’s disease, Huntington disease, Parkinson’s disease, and other neurological disorders in Australia.
Flawless balance sheet medium-low.