Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
Active investing isn’t easy, but for those that do it, the aim is to find the best companies to buy, and to profit handsomely. When you buy and hold the right company, the returns can make a huge difference to both you and your family. For example, the Unity Metals Corp. (CVE:UTY) share price is up a whopping 650% in the last year, a handsome return in a single year. On top of that, the share price is up 200% in about a quarter. Also impressive, the stock is up 43% over three years, making long term shareholders happy, too.
Anyone who held for that rewarding ride would probably be keen to talk about it.
Unity Metals hasn’t yet reported any revenue yet, so it’s as much a business idea as a business. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. We’d posit some have faith that Unity Metals will discover or develop new oil or gas reserves before too long.
As a general rule, if a company doesn’t have revenue, and it loses money, then it is a high risk investment. The is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Unity Metals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Unity Metals had net debt of CA$135,949 when it last reported in September 2018, according to our data. That makes it extremely high risk, in our view. So the fact that the stock is up 650% in the last year shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. You can click on the image below to see (in greater detail) how Unity Metals’s cash and debt 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 often positive if so, assuming the buying is sustained and meaningful. 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 Unity Metals shareholders have received a total shareholder return of 650% over one year. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7.0% 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. Before spending more time on Unity Metals it might be wise to click here to see if insiders have been buying or selling shares.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of companies that have proven they can grow earnings.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 email@example.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.