Imagine Holding RosCan Gold (CVE:ROS) Shares While The Price Zoomed 767% Higher

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Generally speaking, investors are inspired to be stock pickers by the potential to find the big winners. Not every pick can be a winner, but when you pick the right stock, you can win big. One bright shining star stock has been RosCan Gold Corporation (CVE:ROS), which is 767% higher than three years ago. It’s also good to see the share price up 30% over the last quarter. This could be related to the recent financial results, released recently – you can catch up on the most recent data by reading our company report.

Anyone who held for that rewarding ride would probably be keen to talk about it.

Check out our latest analysis for RosCan Gold

RosCan Gold 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. For example, investors may be hoping that RosCan Gold finds some valuable resources, before it runs out of money.

We think companies that have neither significant revenues nor profits are pretty 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). RosCan Gold has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

When it reported in April 2019 RosCan Gold had minimal cash in excess of all liabilities consider its expenditure: just CA$2.7m to be specific. So if it hasn’t remedied the situation already, it will almost certainly have to raise more capital soon. Given how low on cash the it got, investors must really like its potential for the share price to be up 105% per year, over 3 years. You can see in the image below, how RosCan Gold’s cash levels have changed over time (click to see the values).

TSXV:ROS Historical Debt, July 18th 2019
TSXV:ROS Historical Debt, July 18th 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. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that’s certainly a good thing. You can click here to see if there are insiders buying.

A Different Perspective

It’s nice to see that RosCan Gold shareholders have received a total shareholder return of 30% over the last year. Having said that, the five-year TSR of 45% a year, is even better. Potential buyers might understandably feel they’ve missed the opportunity, but it’s always possible business is still firing on all cylinders. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares – and the price they paid.

RosCan Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

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.