Yahoo Finance Should Magna Terra Minerals (CVE:MTT) Be Disappointed With Their 80% Profit?
One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. For example, Magna Terra Minerals Inc. (CVE:MTT) shareholders have seen the share price rise 80% over three years, well in excess of the market return (16%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 13% in the last year.
Check out our latest analysis for Magna Terra Minerals
Magna Terra Minerals hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. 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 Magna Terra Minerals 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. The 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Magna Terra Minerals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Our data indicates that Magna Terra Minerals had net debt of CA$600,165 when it last reported in November 2018. That makes it extremely high risk, in our view. So we're surprised to see the stock up 22% per year, over 3 years, but we're happy for holders. It's clear more than a few people believe in the potential. The image below shows how Magna Terra Minerals'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. Given that situation, many of the best investors like to check if insiders have been buying shares. It's often positive if so, assuming the buying is sustained and meaningful. 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 Magna Terra Minerals shareholders have received a total shareholder return of 13% over the last year. That's better than the annualised return of 2.4% over half a decade, implying that the company is doing better recently. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Magna Terra Minerals it might be wise to click here to see if insiders have been buying or selling shares.
Of course Magna Terra Minerals 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.
