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The simplest way to invest in stocks is to buy exchange traded funds. But if you pick the right individual stocks, you could make more than that. For example, the TC TECH Sweden AB (publ) (STO:TCT) share price is up 42% in the last year, clearly besting than the market return of around 4.3% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 20% in the last three years.
Check out our latest analysis for TC TECH Sweden
TC TECH Sweden recorded just kr6,962,000 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 that the investors focused more on what could be, than paying attention to the current revenues (or lack thereof). Investors will be hoping that TC TECH Sweden can make progress and gain better traction for the business, before it runs low on cash.
As a general rule, if a company doesn't have much revenue, and it loses money, then it is a high risk investment. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
When it reported in March 2019 TC TECH Sweden had minimal net cash consider its expenditure: just kr14m to be specific. So if it hasn't remedied the situation already, it will almost certainly have to raise more capital soon. It's a testament to the popularity of the business plan that the share price gained 42% in the last year, despite the weak balance sheet. The image below shows how TC TECH Sweden's balance sheet has changed over time; if you want to see the precise values, simply click on the image.
Of course, the truth is that it is hard to value companies without much revenue or profit. One thing you can do is check if company insiders are buying shares. It's often positive if so, assuming the buying is sustained and meaningful. Luckily we are in a position to provide you with this free chart of insider buying (and selling).
What about the Total Shareholder Return (TSR)?
We've already covered TC TECH Sweden's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. TC TECH Sweden hasn't been paying dividends, but its TSR of 50% exceeds its share price return of 42%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.