Gitennes Exploration Inc. (CVE:GIT) shareholders might be concerned after seeing the share price drop 17% in the last quarter. But that doesn’t change the fact that the returns over the last three years have been spectacular. The longer term view reveals that the share price is up 400% in that period. Arguably, the recent fall is to be expected after such a strong rise. The thing to consider is whether there is still too much elation around the company’s prospects.
With zero revenue generated over twelve months, we Gitennes Exploration has proved its business plan yet. So it seems that the investors more focused on would could be, than paying attention to the current revenues (or lack thereof). For example, investors may be hoping that Gitennes Exploration finds some valuable resources, before it runs out of money.
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. Of course, if you time it right, high risk investments like this can really pay off, as Gitennes Exploration investors might know.
Our data indicates that Gitennes Exploration had net debt of CA$208,577 when it last reported in September 2018. That puts it in the highest risk category, according to our analysis. So we’re surprised to see the stock up 71% per year, over 3 years, but we’re happy for holders. Investors must really like its potential. You can click on the image below to see (in greater detail) how Gitennes Exploration’s cash and debt levels have changed over time.
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. It’s usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
Gitennes Exploration shareholders are down 67% for the year, but the market itself is up 3.5%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn’t be so upset, since they would have made 11%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. If you would like to research Gitennes Exploration in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Gitennes Exploration may not be the best stock to buy. So you may wish to see this free collection of growth stocks.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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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.