The five-year returns have been stellar for Metalla Royalty & Streaming (CVE:MTA) shareholders despite underlying losses increasing

When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. For example, the Metalla Royalty & Streaming Ltd. (CVE:MTA) share price has soared 151% in the last half decade. Most would be very happy with that. It's even up 11% in the last week.

Since it's been a strong week for Metalla Royalty & Streaming shareholders, let's have a look at trend of the longer term fundamentals.

Check out our latest analysis for Metalla Royalty & Streaming

With just US$2,598,731 worth of revenue in twelve months, we don't think the market considers Metalla Royalty & Streaming to have proven its business plan. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Metalla Royalty & Streaming will find or develop a valuable new mine before too long.

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). Metalla Royalty & Streaming has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Metalla Royalty & Streaming had liabilities exceeding cash by US$7.9m when it last reported in September 2022, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 84% per year, over 5 years , but we're happy for holders. Investors must really like its potential. You can see in the image below, how Metalla Royalty & Streaming's cash levels have changed over time (click to see the values).

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. 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.

What About The Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Metalla Royalty & Streaming's total shareholder return (TSR) and its share price return. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Its history of dividend payouts mean that Metalla Royalty & Streaming's TSR of 158% over the last 5 years is better than the share price return.

A Different Perspective

While the broader market lost about 5.9% in the twelve months, Metalla Royalty & Streaming shareholders did even worse, losing 30%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Longer term investors wouldn't be so upset, since they would have made 21%, each year, over five years. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It's always interesting to track share price performance over the longer term. But to understand Metalla Royalty & Streaming better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 5 warning signs with Metalla Royalty & Streaming (at least 1 which is a bit unpleasant) , and understanding them should be part of your investment process.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Canadian exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.