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Can You Imagine How Galway Metals's (CVE:GWM) Shareholders Feel About The 86% Share Price Increase?

Simply Wall St

Galway Metals Inc. (CVE:GWM) shareholders might be concerned after seeing the share price drop 24% in the last month. But don't let that distract from the very nice return generated over three years. To wit, the share price did better than an index fund, climbing 86% during that period.

View our latest analysis for Galway Metals

Galway Metals hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. So it seems that the investors more focused on would could be, than paying attention to the current revenues (or lack thereof). It seems likely some shareholders believe that Galway Metals will find or develop a valuable new mine before too long.

As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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). Galway Metals has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Galway Metals had net cash of just CA$4.3m when it last reported (September 2018). So if it has not already moved to replenish reserves, we think the near-term chances of a capital raising event are pretty high. Given how low on cash the it got, investors must really like its potential for the share price to be up 23% per year, over 3 years. The image below shows how Galway Metals's balance sheet has changed over time; if you want to see the precise values, simply click on the image.

TSXV:GWM Historical Debt, April 12th 2019

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. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

It's good to see that Galway Metals has rewarded shareholders with a total shareholder return of 18% in the last twelve months. That gain is better than the annual TSR over five years, which is 12%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. 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 Galway Metals by clicking this link.

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.