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LexaGene Holdings (CVE:LXG) Shares Have Generated A Total Return Of 126% In The Last Three Years

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. To wit, the LexaGene Holdings Inc. (CVE:LXG) share price has flown 126% in the last three years. Most would be happy with that. It's also good to see the share price up 56% over the last quarter.

See our latest analysis for LexaGene Holdings

With zero revenue generated over twelve months, we don't think that LexaGene Holdings has proved its business plan yet. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that LexaGene Holdings will significantly advance the business plan before too long.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. LexaGene Holdings has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

LexaGene Holdings had liabilities exceeding cash by US$1.8m when it last reported in August 2019, according to our data. That puts it in the highest risk category, according to our analysis. So the fact that the stock is up 91% per year, over 3 years shows that high risks can lead to high rewards, sometimes. It's clear more than a few people believe in the potential. You can click on the image below to see (in greater detail) how LexaGene Holdings's cash levels have changed over time. The image below shows how LexaGene Holdings's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

TSXV:LXG Historical Debt, January 6th 2020

Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up shares. It's usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

The last twelve months weren't great for LexaGene Holdings shares, which cost holders 3.8%, while the market was up about 17%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 31% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. If you would like to research LexaGene Holdings in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can 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.