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Cantex Mine Development Corp. (CVE:CD) shareholders might be concerned after seeing the share price drop 17% in the last week. But that isn't a problem when you consider how the share price has soared over the last year. Few could complain about the impressive 1922% rise, throughout the period. So it is not that surprising to see the stock retrace a little. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
Anyone who held for that rewarding ride would probably be keen to talk about it.
Cantex Mine Development 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). 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. For example, investors may be hoping that Cantex Mine Development finds some valuable resources, before it runs out of money.
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 do very well over the long term, others become hyped up by promoters before eventually falling back down to earth, and going bankrupt (or being recapitalized). Some Cantex Mine Development 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.
Cantex Mine Development has plenty of cash in the bank, with cash in excess of all liabilities sitting at CA$9.1m, when it last reported (April 2019). That allows management to focus on growing the business, and not worry too much about raising capital. And with the share price up 1922% in the last year, the market is focussed on that blue sky potential. You can click on the image below to see (in greater detail) how Cantex Mine Development's cash levels have changed over time. You can see in the image below, how Cantex Mine Development'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. 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
It's nice to see that Cantex Mine Development shareholders have received a total shareholder return of 1922% over the last year. That gain is better than the annual TSR over five years, which is 51%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Cantex Mine Development by clicking this link.
Cantex Mine Development 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.
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 firstname.lastname@example.org. 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.