Yahoo Finance Is Tenth Avenue Petroleum's (CVE:TPC) 114% Share Price Increase Well Justified?
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The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Tenth Avenue Petroleum Corp. (CVE:TPC) share price has soared 114% in the last three years. How nice for those who held the stock! Meanwhile the share price is 150% higher than it was a week ago.
See our latest analysis for Tenth Avenue Petroleum
With just CA$762,122 worth of revenue in twelve months, we don't think the market considers Tenth Avenue Petroleum to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Tenth Avenue Petroleum finds fossil fuels with an exploration program, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. You should be aware that there is always a chance that this sort of company will need to issue more shares to raise money to continue pursuing its business plan. 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. Of course, if you time it right, high risk investments like this can really pay off, as Tenth Avenue Petroleum investors might know.
Our data indicates that Tenth Avenue Petroleum had CA$1,964,121 more in total liabilities than it had cash, when it last reported in March 2019. That makes it extremely high risk, in our view. So we're surprised to see the stock up 29% per year, over 3 years, but we're happy for holders. Investors must really like its potential. You can click on the image below to see (in greater detail) how Tenth Avenue Petroleum's cash levels have changed over time.
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. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.
A Different Perspective
We're pleased to report that Tenth Avenue Petroleum shareholders have received a total shareholder return of 88% over one year. Notably the five-year annualised TSR loss of 24% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course Tenth Avenue Petroleum 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.
