The art and science of stock market investing requires a tolerance for losing money on some of the shares you buy. But serious investors should think long and hard about avoiding extreme losses. We wouldn't blame Clear Blue Technologies International Inc. (CVE:CBLU) shareholders if they were still in shock after the stock dropped like a lead balloon, down 71% in just one year. While some investors are willing to stomach this sort of loss, they are usually professionals who spread their bets thinly. Clear Blue Technologies International hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time. On top of that, the share price is down 5.9% in the last week.
Given that Clear Blue Technologies International didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. Shareholders of unprofitable companies usually expect strong revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.
Clear Blue Technologies International's revenue didn't grow at all in the last year. In fact, it fell 32%. That looks pretty grim, at a glance. The share price fall of 71% in a year tells the story. Holders should not lose the lesson: loss making companies should grow revenue. But markets do over-react, so there opportunity for investors who are willing to take the time to dig deeper and understand the business.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Balance sheet strength is crucial. It might be well worthwhile taking a look at our free report on how its financial position has changed over time.
A Different Perspective
Given that the market gained 3.3% in the last year, Clear Blue Technologies International shareholders might be miffed that they lost 71%. While the aim is to do better than that, it's worth recalling that even great long-term investments sometimes underperform for a year or more. With the stock flat over the last three months, the market now seems fairly ambivalent about the business. Basically, most investors should be wary of buying into a poor-performing stock, unless the business itself has clearly improved. If you would like to research Clear Blue Technologies International in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
We will like Clear Blue Technologies International better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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 firstname.lastname@example.org. 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.