Is Canadian Orebodies’s (CVE:CORE) Share Price Gain Of 127% Well Earned?

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Canadian Orebodies Inc. (CVE:CORE) share price has soared 127% in the last half decade. Most would be very happy with that. On top of that, the share price is up 33% in about a quarter.

Check out our latest analysis for Canadian Orebodies

Canadian Orebodies didn’t have any revenue in the last year, so it’s fair to say it doesn’t yet have a proven product (or at least not one people are paying for). 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 Canadian Orebodies will find or develop a valuable new mine before too long.

We think companies that have neither significant revenues nor profits are pretty 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 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 Canadian Orebodies 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

Canadian Orebodies had net cash of CA$2.3m when it last reported (October 2018). That’s not too bad but management may have to think about raising capital or taking on debt, unless the company is close to breaking even. With the share price up 18% per year, over 5 years, the market is seems hopeful about the potential, despite the cash burn. You can see in the image below, how Canadian Orebodies’s cash and debt levels have changed over time (click to see the values).

TSXV:CORE Historical Debt, March 13th 2019
TSXV:CORE Historical Debt, March 13th 2019

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. Given that situation, many of the best investors like to check if insiders have been buying 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

It’s good to see that Canadian Orebodies has rewarded shareholders with a total shareholder return of 13% in the last twelve months. However, the TSR over five years, coming in at 18% per year, is even more impressive. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

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 editorial-team@simplywallst.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.