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While some are satisfied with an index fund, active investors aim to find truly magnificent investments on the stock market. When an investor finds a multi-bagger (a stock that goes up over 200%), it makes a big difference to their portfolio. For example, the Meridian Mining S.E. (CVE:MNO) share price is up a whopping 530% in the last year, a handsome return in a single year. It's also good to see the share price up 223% over the last quarter. This could be related to the recent financial results, released recently - you can catch up on the most recent data by reading our company report. And shareholders have also done well over the long term, with an increase of 57% in the last three years.
Anyone who held for that rewarding ride would probably be keen to talk about it.
We don't think Meridian Mining's revenue of US$2,727,075 is enough to establish significant demand. 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 Meridian Mining will find or develop a valuable new mine before too long.
Companies that lack both meaningful revenue and profits are usually considered high risk. There was already a significant chance that they would need more money for business development, and indeed they recently put themselves at the mercy of capital markets and raised equity. So the share price itself impacts the value of the shares (as it determines the cost of capital). 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. Some Meridian Mining investors have already had a taste of the sweet taste stocks like this can leave in the mouth, as they gain popularity and attract speculative capital.
Meridian Mining had liabilities exceeding cash when it last reported, according to our data. That made it extremely high risk, in our view. So the fact that the stock is up 42% in the last year shows that the cash injection was a welcome one. It's clear more than a few people believe in the potential. You can see in the image below, how Meridian Mining's cash levels have changed over time (click to see the values).
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. Given that situation, many of the best investors like to check if insiders have been buying shares. It's often positive if so, assuming the buying is sustained and meaningful. You can click here to see if there are insiders buying.
A Different Perspective
It's nice to see that Meridian Mining shareholders have gained 530% (in total) over the last year. So this year's TSR was actually better than the three-year TSR (annualized) of 16%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Meridian Mining better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we've spotted with Meridian Mining (including 2 which are concerning) .
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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