Yahoo Finance If You Had Bought Marathon Gold (TSE:MOZ) Stock Five Years Ago, You Could Pocket A 185% Gain Today
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, you can make far more than 100% on a really good stock. For example, the Marathon Gold Corporation (TSE:MOZ) share price has soared 185% in the last half decade. Most would be very happy with that. Also pleasing for shareholders was the 27% gain in the last three months.
See our latest analysis for Marathon Gold
With zero revenue generated over twelve months, we don't think that Marathon Gold has proved its business plan yet. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). For example, investors may be hoping that Marathon Gold 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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Of course, if you time it right, high risk investments like this can really pay off, as Marathon Gold investors might know.
When it last reported its balance sheet in March 2019, Marathon Gold had cash in excess of all liabilities of CA$13m. While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price up 23% per year, over 5 years, the market is seems hopeful about the potential, despite the cash burn. You can click on the image below to see (in greater detail) how Marathon Gold's cash levels have changed over time. You can see in the image below, how Marathon Gold'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. One thing you can do is check if company insiders are buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.
A Different Perspective
It's nice to see that Marathon Gold shareholders have received a total shareholder return of 21% over the last year. However, the TSR over five years, coming in at 23% per year, is even more impressive. It is all well and good that insiders have been buying shares, but we suggest you check here to see what price insiders were buying at.
Marathon Gold is not the only stock insiders are buying. So take a peek at this free list of growing companies with 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.
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.
