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While not a mind-blowing move, it is good to see that the Goldcliff Resource Corporation (CVE:GCN) share price has gained 22% in the last three months. But that doesn’t change the fact that the returns over the last three years have been disappointing. Regrettably, the share price slid 56% in that period. So the improvement may be a real relief to some. Perhaps the company has turned over a new leaf.
Goldcliff Resource 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). We can’t help wondering why it’s publicly listed so early in its journey. Are venture capitalists not interested? So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, investors may be hoping that Goldcliff Resource finds some valuable resources, before it runs out of money.
Companies that lack both meaningful revenue and profits are usually considered high risk. There is almost always a chance they will need to raise more capital, and their progress – and share price – will dictate how dilutive that is 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). Some Goldcliff Resource investors have already had a taste of the bitterness stocks like this can leave in the mouth.
Goldcliff Resource had liabilities exceeding cash by CA$592,601 when it last reported in April 2019, according to our data. That makes it extremely high risk, in our view. But with the share price diving 24% per year, over 3 years, it’s probably fair to say that some shareholders no longer believe the company will succeed. You can click on the image below to see (in greater detail) how Goldcliff Resource’s cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. What if insiders are ditching the stock hand over fist? I’d like that just about as much as I like to drink milk and fruit juice mixed together. You can click here to see if there are insiders selling.
A Different Perspective
It’s good to see that Goldcliff Resource has rewarded shareholders with a total shareholder return of 22% in the last twelve months. Notably the five-year annualised TSR loss of 6.0% per year compares very unfavourably with the recent share price performance. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. If you would like to research Goldcliff Resource in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Goldcliff Resource may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.