It hasn't been the best quarter for Noxopharm Limited (ASX:NOX) shareholders, since the share price has fallen 12% in that time. But in three years the returns have been great. In fact, the share price is up a full 116% compared to three years ago. So the recent fall in the share price should be viewed in that context. The fundamental business performance will ultimately dictate whether the top is in, or if this is a stellar buying opportunity.

See our latest analysis for Noxopharm

With just AU$3,750,675 worth of revenue in twelve months, we don't think the market considers Noxopharm to have proven its business plan. So it seems shareholders are too busy dreaming about the progress to come than dwelling on the current (lack of) revenue. It seems likely some shareholders believe that Noxopharm has the funding to invent a new product 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 go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Noxopharm has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

Our data indicates that Noxopharm had AU$2.8m more in total liabilities than it had cash, when it last reported in June 2019. That makes it extremely high risk, in our view. So we're surprised to see the stock up 94% per year, over 3 years , but we're happy for holders. It's clear more than a few people believe in the potential. You can click on the image below to see (in greater detail) how Noxopharm's cash levels have changed over time. You can see in the image below, how Noxopharm'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. One thing you can do is check if company insiders are buying shares. It's usually a positive if they have, as it may indicate they see value in the stock. Luckily we are in a position to provide you with this free chart of insider buying (and selling).

A Different Perspective

Noxopharm shareholders are down 38% for the year, but the broader market is up 16%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Investors are up over three years, booking 29% per year, much better than the more recent returns. Sometimes when a good quality long term winner has a weak period, it's turns out to be an opportunity, but you really need to be sure that the quality is there. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.