Update: Sociedad Punta del Cobre (SNSE:PUCOBRE) Stock Gained 27% In The Last Year

These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But if you pick the right individual stocks, you could make more than that. For example, the Sociedad Punta del Cobre S.A. (SNSE:PUCOBRE) share price is up 27% in the last year, clearly besting the market decline of around 13% (not including dividends). So that should have shareholders smiling. Sociedad Punta del Cobre hasn't been listed for long, so it's still not clear if it is a long term winner.

Check out our latest analysis for Sociedad Punta del Cobre

We don't think Sociedad Punta del Cobre's revenue of US$278,115,000 is enough to establish significant demand. 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 Sociedad Punta del Cobre 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).

Our data indicates that Sociedad Punta del Cobre had US$137m more in total liabilities than it had cash, when it last reported in September 2020. That makes it extremely high risk, in our view. So the fact that the stock is up 143% in the last year shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. The image below shows how Sociedad Punta del Cobre's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

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).

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Sociedad Punta del Cobre the TSR over the last year was 32%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence!

A Different Perspective

Sociedad Punta del Cobre boasts a total shareholder return of 32% for the last year (that includes the dividends) . A substantial portion of that gain has come in the last three months, with the stock up 14% in that time. This suggests the company is continuing to win over new investors. Before deciding if you like the current share price, check how Sociedad Punta del Cobre scores on these 3 valuation metrics.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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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. 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.
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