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Those Who Purchased Group Ten Metals (CVE:PGE) Shares Three Years Ago Have A 45% Loss To Show For It

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As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Group Ten Metals Inc. (CVE:PGE) shareholders, since the share price is down 45% in the last three years, falling well short of the market return of around 26%. And more recent buyers are having a tough time too, with a drop of 43% in the last year. Shareholders have had an even rougher run lately, with the share price down 29% in the last 90 days.

View our latest analysis for Group Ten Metals

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With zero revenue generated over twelve months, we don't think that Group Ten Metals has proved its business plan yet. We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, investors may be hoping that Group Ten Metals finds some valuable resources, before it runs out of money.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing.

Group Ten Metals had net debt of CA$808,709 when it last reported in December 2018, according to our data. That puts it in the highest risk category, according to our analysis. But with the share price diving 18% per year, over 3 years, it's probably fair to say that some shareholders no longer believe the company will succeed. The image below shows how Group Ten Metals's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

TSXV:PGE Historical Debt, May 3rd 2019
TSXV:PGE Historical Debt, May 3rd 2019

Of course, the truth is that it is hard to value companies without much revenue or profit. Would it bother you if insiders were selling the stock? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

Investors in Group Ten Metals had a tough year, with a total loss of 43%, against a market gain of about 4.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 8.5% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. If you want to research this stock further, the data on insider buying is an obvious place to start. You can click here to see who has been buying shares - and the price they paid.

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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.