The Renaissance Oil (CVE:ROE) Share Price Is Up 763% And Shareholders Are Delighted

While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When you find (and hold) a big winner, you can markedly improve your finances. For example, Renaissance Oil Corp. (CVE:ROE) has generated a beautiful 763% return in just a single year. And in the last week the share price has popped 214%. Looking back further, the stock price is 35% higher than it was three years ago.

It really delights us to see such great share price performance for investors.

See our latest analysis for Renaissance Oil

Renaissance Oil recorded just CA$3,109,063 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. 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. It seems likely some shareholders believe that Renaissance Oil will discover or develop fossil fuel before too long.

We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets to raise equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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. Some Renaissance Oil investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.

Our data indicates that Renaissance Oil had CA$16m more in total liabilities than it had cash, when it last reported in September 2020. That makes it extremely high risk, in our view. So we're surprised to see the stock up 33% in the last year , but we're happy for holders. It's clear more than a few people believe in the potential. You can click on the image below to see (in greater detail) how Renaissance Oil's cash levels have changed over time.

Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.

A Different Perspective

We're pleased to report that Renaissance Oil shareholders have received a total shareholder return of 763% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 28% per year), it would seem that the stock's performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. It's always interesting to track share price performance over the longer term. But to understand Renaissance Oil better, we need to consider many other factors. Take risks, for example - Renaissance Oil has 4 warning signs we think you should be aware of.

We will like Renaissance Oil better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider 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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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. 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.
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