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It hasn't been the best quarter for Unity Metals Corp. (CVE:UTY) shareholders, since the share price has fallen 17% in that time. But over the last year the share price has taken off like one of Elon Musk's rockets. In fact, it is up 429% in that time. Arguably, the recent fall is to be expected after such a strong rise. Of course, winners often do keep winning, so there may be more gains to come (if the business fundamentals stack up).
See our latest analysis for Unity Metals
Unity Metals hasn't yet reported any revenue yet, so it's as much a business idea as an actual business. 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 Unity Metals finds fossil fuels with an exploration program, before it runs out of money.
We think companies that have neither significant revenues nor profits are pretty high risk. There is usually a significant chance that they will need more money for business development, putting them at the mercy of capital markets. 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. Of course, if you time it right, high risk investments like this can really pay off, as Unity Metals investors might know.
Unity Metals had cash in excess of all liabilities of just CA$89k when it last reported (December 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. It's a testament to the popularity of the business plan that the share price gained 429% in the last year, despite the weak balance sheet. You can see in the image below, how Unity Metals's cash levels have changed over time (click to see the values).
Of course, the truth is that it is hard to value companies without much revenue or profit. However you can take a look at whether insiders have been buying up 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 good to see that Unity Metals has rewarded shareholders with a total shareholder return of 429% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 12% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. Before spending more time on Unity Metals it might be wise to click here to see if insiders have been buying or selling shares.