Yahoo Finance Can You Imagine How Chuffed Alvopetro Energy’s (CVE:ALV) Shareholders Feel About Its 266% Share Price Gain?
When you buy shares in a company, there is always a risk that the price drops to zero. But if you pick the right business to buy shares in, you can make more than you can lose. For example, the Alvopetro Energy Ltd. (CVE:ALV) share price had more than doubled in just one year – up 266%. On top of that, the share price is up 33% in about a quarter. And shareholders have also done well over the long term, with an increase of 77% in the last three years.
View our latest analysis for Alvopetro Energy
We don’t think Alvopetro Energy’s revenue of US$613,000 is enough to establish significant demand. 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 Alvopetro Energy finds oil or gas with an exploration program, before it runs out of money.
As a general rule, if a company doesn’t have much revenue, and it loses money, then it is a high risk investment. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Alvopetro Energy 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 September 2018 Alvopetro Energy had minimal net cash consider its expenditure: just US$826k 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 266% in the last year, despite the weak balance sheet. The image belows shows how Alvopetro Energy’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. Given that situation, many of the best investors like to check if insiders have been 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 Alvopetro Energy shareholders have received a total shareholder return of 266% over the last year. That certainly beats the loss of about 13% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
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.
