It certainly might concern Chibougamau Independent Mines Inc. (CVE:CBG) shareholders to see the share price down 39% in just 30 days. But looking back over the last year, the returns have actually been rather pleasing! Looking at the full year, the company has easily bested an index fund by gaining 83%.
With zero revenue generated over twelve months, we don't think that Chibougamau Independent Mines has proved its business plan yet. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Chibougamau Independent Mines will find or develop a valuable new mine before too long.
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 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). Some Chibougamau Independent Mines investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
When it last reported its balance sheet in March 2019, Chibougamau Independent Mines had cash in excess of all liabilities of CA$153k. 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 83% in the last year, the market is seems hopeful about the potential, despite the cash burn. The image below shows how Chibougamau Independent Mines's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Chibougamau Independent Mines's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. Given that situation, many of the best investors like to check if insiders have been buying shares. If they are buying a significant amount of shares, that's certainly a good thing. 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 Chibougamau Independent Mines shareholders have received a total shareholder return of 83% over the last year. There's no doubt those recent returns are much better than the TSR loss of 1.7% per year over five years. We generally put more weight on the long term performance over the short term, but the recent improvement could hint at a (positive) inflection point within the business. If you would like to research Chibougamau Independent Mines in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
If you are like me, then you will not want to miss this free list of growing companies that insiders are 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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