Introducing Orthocell (ASX:OCC), The Stock That Zoomed 259% In The Last Year
Unfortunately, investing is risky - companies can and do go bankrupt. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Orthocell Limited (ASX:OCC) share price has soared 259% return in just a single year. The last week saw the share price soften some 1.0%. Having said that, the longer term returns aren't so impressive, with stock gaining just 9.0% in three years.
View our latest analysis for Orthocell
Orthocell recorded just AU$945,657 in revenue over the last twelve months, which isn't really enough for us to consider it to have a proven product. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. For example, they may be hoping that Orthocell comes up with a great new product, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. 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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Of course, if you time it right, high risk investments like this can really pay off, as Orthocell investors might know.
When it last reported its balance sheet in June 2019, Orthocell had cash in excess of all liabilities of AU$8.4m. While that's nothing to panic about, there is some possibility the company will raise more capital, especially if profits are not imminent. With the share price up 64% in the last year , the market is seems hopeful about the potential, despite the cash burn. You can click on the image below to see (in greater detail) how Orthocell's cash levels have changed over time. You can see in the image below, how Orthocell's cash levels have changed over time (click to see the values).
In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. Given that situation, many of the best investors like to check if insiders have been buying 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 Orthocell shareholders have received a total shareholder return of 259% over the last year. That gain is better than the annual TSR over five years, which is 5.0%. 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. 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. Take risks, for example - Orthocell has 5 warning signs (and 2 which are a bit unpleasant) we think you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on AU 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.
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