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Update: Imagination Park Technologies (CSE:IP) Stock Gained 50% In The Last Three Years

Simply Wall St

Imagination Park Technologies Inc. (CSE:IP) shareholders might be concerned after seeing the share price drop 14% in the last week. But over three years, the returns would have left most investors smiling In fact, the company's share price bested the return of its market index in that time, posting a gain of 50%.

Check out our latest analysis for Imagination Park Technologies

With just CA$108,977 worth of revenue in twelve months, we don't think the market considers Imagination Park Technologies to have proven its business plan. 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. It seems likely some shareholders believe that Imagination Park Technologies will significantly advance the business plan before too long.

Companies that lack both meaningful revenue and profits are usually considered 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 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).

Imagination Park Technologies had liabilities exceeding cash by CA$451k when it last reported in November 2019, according to our data. That puts it in the highest risk category, according to our analysis. So we're surprised to see the stock up 125% per year, over 3 years , but we're happy for holders. It's clear more than a few people believe in the potential. The image below shows how Imagination Park Technologies's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Imagination Park Technologies's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

CNSX:IP Historical Debt, January 31st 2020

Of course, the truth is that it is hard to value companies without much revenue or profit. 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, Imagination Park Technologies shareholders took a loss of 33%. In contrast the market gained about 11%. Of course the long term matters more than the short term, and even great stocks will sometimes have a poor year. Fortunately the longer term story is brighter, with total returns averaging about 14% per year over three years. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Like risks, for instance. Every company has them, and we've spotted 7 warning signs for Imagination Park Technologies (of which 5 are potentially serious!) you should know about.

But note: Imagination Park Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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.

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. Thank you for reading.