Introducing NuCana (NASDAQ:NCNA), The Stock That Dropped 10% In The Last Year
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Over the last month the NuCana plc (NASDAQ:NCNA) has been much stronger than before, rebounding by 43%. But that doesn't change the reality of under-performance over the last twelve months. In fact the stock is down 10% in the last year, well below the market return.
See our latest analysis for NuCana
NuCana 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). This state of affairs suggests that venture capitalists won't provide funds on attractive terms. So it seems that the investors more focused on would could be, than paying attention to the current revenues (or lack thereof). For example, they may be hoping that NuCana comes up with a great new treatment, 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. 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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
NuCana has plenty of cash in the bank, with net cash sitting at UK£71m, when it last reported (December 2018). That allows management to focus on growing the business, and not worry too much about raising capital. But since the share price has dropped 10% in the last year, it seems like the market might have been over-excited previously. The image below shows how NuCana'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. What if insiders are ditching the stock hand over fist? 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
Given that the market gained 8.1% in the last year, NuCana shareholders might be miffed that they lost 10%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. It's great to see a nice little 8.1% rebound in the last three months. This could just be a bounce because the selling was too aggressive, but fingers crossed it's the start of a new trend. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
