Yahoo Finance MacDonald Mines Exploration (CVE:BMK) Shareholders Have Enjoyed An Impressive 140% Share Price Gain
MacDonald Mines Exploration Ltd. (CVE:BMK) shareholders might understandably be very concerned that the share price has dropped 37% in the last quarter. But that doesn't detract from the splendid returns of the last year. Like an eagle, the share price soared 140% in that time. So it may be that the share price is simply cooling off after a strong rise. The real question is whether the business is trending in the right direction.
View our latest analysis for MacDonald Mines Exploration
MacDonald Mines Exploration recorded just CA$74,000 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. It seems likely some shareholders believe that MacDonald Mines Exploration will find or develop a valuable new mine before too long.
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. Some MacDonald Mines Exploration 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.
Our data indicates that MacDonald Mines Exploration had CA$1.0m more in total liabilities than it had cash, when it last reported in September 2019. That makes it extremely high risk, in our view. So the fact that the stock is up 87% in the last year shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. You can see in the image below, how MacDonald Mines Exploration's cash levels have changed over time (click to see the values). The image below shows how MacDonald Mines Exploration's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much 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. 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 MacDonald Mines Exploration shareholders have received a total shareholder return of 140% over the last year. There's no doubt those recent returns are much better than the TSR loss of 17% 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. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We've spotted 7 warning signs for MacDonald Mines Exploration you should be aware of, and 5 of them are a bit concerning.
MacDonald Mines Exploration is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.
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.
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