Yahoo Finance Some Greencastle Resources (CVE:VGN) Shareholders Have Copped A Big 54% Share Price Drop
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If you are building a properly diversified stock portfolio, the chances are some of your picks will perform badly. But the long term shareholders of Greencastle Resources Ltd. (CVE:VGN) have had an unfortunate run in the last three years. Unfortunately, they have held through a 54% decline in the share price in that time. The more recent news is of little comfort, with the share price down 24% in a year. The falls have accelerated recently, with the share price down 19% in the last three months.
Check out our latest analysis for Greencastle Resources
Greencastle Resources 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). You have to wonder why venture capitalists aren't funding it. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Greencastle Resources finds fossil fuels with an exploration program, 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Some Greencastle Resources investors have already had a taste of the bitterness stocks like this can leave in the mouth.
When it last reported its balance sheet in March 2019, Greencastle Resources could boast a strong position, with cash in excess of all liabilities of CA$2.6m. That allows management to focus on growing the business, and not worry too much about raising capital. But with the share price diving 23% per year, over 3 years, it could be that the price was previously too hyped up. You can click on the image below to see (in greater detail) how Greencastle Resources's cash levels have changed over time. The image below shows how Greencastle Resources's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Greencastle Resources shareholders are down 24% for the year, but the market itself is up 2.2%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 5.2% over the last half decade. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Before spending more time on Greencastle Resources it might be wise to click here to see if insiders have been buying or selling shares.
But note: Greencastle Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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.
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.
