Yahoo Finance Is Omineca Mining and Metals's (CVE:OMM) Share Price Gain Of 120% Well Earned?
Omineca Mining and Metals Ltd. (CVE:OMM) shareholders might understandably be very concerned that the share price has dropped 31% in the last quarter. But that doesn't change the fact that the returns over the last year have been very strong. During that period, the share price soared a full 120%. So it is important to view the recent reduction in price through that lense. More important, going forward, is how the business itself is going.
See our latest analysis for Omineca Mining and Metals
Omineca Mining and Metals 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). 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 Omineca Mining and Metals 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 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. Omineca Mining and Metals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Omineca Mining and Metals had liabilities exceeding cash by CA$9,271,005 when it last reported in March 2019, according to our data. That puts it in the highest risk category, according to our analysis. So the fact that the stock is up 120% in the last year shows that high risks can lead to high rewards, sometimes. Investors must really like its potential. The image below shows how Omineca Mining and Metals's balance sheet has changed over time; if you want to see the precise values, simply click on the image. You can see in the image below, how Omineca Mining and Metals's cash levels have changed over time (click to see the values).
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. However you can take a look at whether insiders have been buying up shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.
A Different Perspective
It's good to see that Omineca Mining and Metals has rewarded shareholders with a total shareholder return of 120% in the last twelve months. That's better than the annualised return of 4.1% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Before spending more time on Omineca Mining and Metals it might be wise to click here to see if insiders have been buying or selling shares.
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.
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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.
