Portuaria Cabo Froward (SNSE:FROWARD) Has Rewarded Shareholders With An Exceptional 549% Total Return On Their Investment

Buying shares in the best businesses can build meaningful wealth for you and your family. And highest quality companies can see their share prices grow by huge amounts. Just think about the savvy investors who held Portuaria Cabo Froward S.A. (SNSE:FROWARD) shares for the last five years, while they gained 303%. And this is just one example of the epic gains achieved by some long term investors.

Check out our latest analysis for Portuaria Cabo Froward

Portuaria Cabo Froward recorded just US$41,401,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that Portuaria Cabo Froward can make progress and gain better traction for the business, before it runs low on cash.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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 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). Portuaria Cabo Froward has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Our data indicates that Portuaria Cabo Froward had US$33m more in total liabilities than it had cash, when it last reported in September 2020. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 58% per year, over 5 years , but we're happy for holders. It's clear more than a few people believe in the potential. You can see in the image below, how Portuaria Cabo Froward'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. However you can take a look at whether insiders have been buying up 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.

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 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Portuaria Cabo Froward the TSR over the last 5 years was 549%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It's nice to see that Portuaria Cabo Froward shareholders have received a total shareholder return of 3.0% over the last year. That's including the dividend. However, the TSR over five years, coming in at 45% per year, is even more impressive. Potential buyers might understandably feel they've missed the opportunity, but it's always possible business is still firing on all cylinders. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For instance, we've identified 2 warning signs for Portuaria Cabo Froward that you should be aware of.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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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