While Helius Medical Technologies, Inc. (NASDAQ:HSDT) shareholders are probably generally happy, the stock hasn’t had particularly good run recently, with the share price falling 21% in the last quarter. But don’t let that distract from the very nice return generated over three years. In the last three years the share price is up, 90%: better than the market.
We don’t think Helius Medical Technologies’s revenue of US$478,000 is enough to establish significant demand. So it seems that the investors more focused on would could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that Helius Medical Technologies can make progress and gain better traction for the business, before it runs low on cash.
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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Helius Medical Technologies has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
Helius Medical Technologies had net cash of just US$7.6m when it last reported (December 2018). So if it hasn’t remedied the situation already, it will almost certainly have to raise more capital soon. Given how low on cash the it got, investors must really like its potential for the share price to be up 24% per year, over 3 years. The image belows shows how Helius Medical Technologies’s balance sheet has changed over time; if you want to see the precise values, simply click on the image.
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 usually a positive if they have, as it may indicate they see value in the stock. You can click here to see if there are insiders buying.
A Different Perspective
Over the last year, Helius Medical Technologies shareholders took a loss of 35%. In contrast the market gained about 3.9%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Investors are up over three years, booking 24% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it’s turns out to be an opportunity, but you really need to be sure that the quality is there. Before spending more time on Helius Medical Technologies it might be wise to click here to see if insiders have been buying or selling shares.
Of course Helius Medical Technologies 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 US exchanges.
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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.