Yahoo Finance The Diamond Fields Resources (CVE:DFR) Share Price Has Gained 80% And Shareholders Are Hoping For More
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It's been a soft week for Diamond Fields Resources Inc. (CVE:DFR) shares, which are down 13%. But don't let that distract from the very nice return generated over three years. After all, the share price is up a market-beating 80% in that time.
Check out our latest analysis for Diamond Fields Resources
Diamond Fields Resources hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Diamond Fields Resources will find or develop a valuable new mine before too long.
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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Diamond Fields Resources 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 December 2018 Diamond Fields Resources had minimal net cash consider its expenditure: just US$398k to be specific. So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. It's a testament to the popularity of the business plan that the share price gained 22% per year, over 3 years, despite the weak balance sheet. You can see in the image below, how Diamond Fields Resources's cash levels have changed over time (click to see the values).
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. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
A Different Perspective
It's nice to see that Diamond Fields Resources shareholders have received a total shareholder return of 42% over the last year. That gain is better than the annual TSR over five years, which is 6.2%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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.
Diamond Fields Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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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.
