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Chibougamau Independent Mines (CVE:CBG) Shareholders Have Enjoyed An Impressive 180% Share Price Gain

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on a lighter note, a good company can see its share price rise well over 100%. For instance, the price of Chibougamau Independent Mines Inc. (CVE:CBG) stock is up an impressive 180% over the last five years. Also pleasing for shareholders was the 40% gain in the last three months.

Check out our latest analysis for Chibougamau Independent Mines

Chibougamau Independent Mines 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 Chibougamau Independent Mines finds some valuable resources, before it runs out of money.

Companies that lack both meaningful revenue and profits are usually considered high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. So the share price itself impacts the value of the shares (as it determines the cost of capital). While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Some Chibougamau Independent Mines investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.

Chibougamau Independent Mines had liabilities exceeding cash by CA$91k when it last reported in September 2019, according to our data. That makes it extremely high risk, in our view. So we're surprised to see the stock up 77% 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 Chibougamau Independent Mines's cash levels have changed over time (click to see the values). You can see in the image below, how Chibougamau Independent Mines's cash levels have changed over time (click to see the values).

TSXV:CBG Historical Debt, February 25th 2020

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. However you can take a look at whether insiders have been buying up shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.

A Different Perspective

It's good to see that Chibougamau Independent Mines has rewarded shareholders with a total shareholder return of 180% in the last twelve months. That's better than the annualised return of 23% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. To that end, you should learn about the 6 warning signs we've spotted with Chibougamau Independent Mines (including 3 which is don't sit too well with us) .

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 CA exchanges.

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.

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. Thank you for reading.