Yahoo Finance Investors Who Bought Shamrock Enterprises (CNSX:SRS) Shares A Year Ago Are Now Down 25%
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the Shamrock Enterprises Inc. (CNSX:SRS) share price is down 25% in the last year. That's well bellow the market return of 1.6%. On the bright side, the stock is actually up 20% in the last three years. The silver lining is that the stock is up 50% in about a week.
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Check out our latest analysis for Shamrock Enterprises
Shamrock Enterprises 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). This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Shamrock Enterprises will find or develop a valuable new mine before too long.
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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
Shamrock Enterprises had liabilities exceeding cash by CA$375,116 when it last reported in February 2019, according to our data. That makes it extremely high risk, in our view. But since the share price has dived -25% in the last year, it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Shamrock Enterprises's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, would you be concerned if it turned out insiders were relentlessly selling stock? I would feel more nervous about the company if that were so. It costs nothing but a moment of your time to see if we are picking up on any insider selling.
A Different Perspective
Shamrock Enterprises shareholders are down 25% for the year, but the broader market is up 1.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Fortunately the longer term story is brighter, with total returns averaging about 6.3% per year over three years. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. You could get a better understanding of Shamrock Enterprises's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Of course Shamrock Enterprises may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
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.
