Yahoo Finance The CCP Technologies (ASX:CT1) Share Price Is Up 170% And Shareholders Are Boasting About It
It's been a soft week for CCP Technologies Limited (ASX:CT1) shares, which are down 29%. But that doesn't change the fact that the returns over the last year have been very strong. Indeed, the share price is up an impressive 170% in that time. So some might not be surprised to see the price retrace some. Investors should be wondering whether the business itself has the fundamental value required to continue to drive gains.
See our latest analysis for CCP Technologies
CCP Technologies recorded just AU$566,678 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). It seems likely some shareholders believe that CCP Technologies will significantly advance the business plan 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. 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 CCP Technologies investors might know.
When it last reported its balance sheet in December 2019, CCP Technologies could boast a strong position, with cash in excess of all liabilities of AU$2.7m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. And with the share price up 79% in the last year , the market is focussed on that blue sky potential. You can see in the image below, how CCP Technologies's cash levels have changed over time (click to see the values). You can click on the image below to see (in greater detail) how CCP Technologies's cash levels have changed over time.
Of course, the truth is that it is hard to value companies without much revenue or profit. Given that situation, many of the best investors like to check if insiders have been 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).
What about the Total Shareholder Return (TSR)?
We've already covered CCP Technologies's share price action, but we should also mention its total shareholder return (TSR). The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. We note that CCP Technologies's TSR, at 282% is higher than its share price return of 170%. When you consider it hasn't been paying a dividend, this data suggests shareholders have benefitted from a spin-off, or had the opportunity to acquire attractively priced shares in a discounted capital raising.
A Different Perspective
It's nice to see that CCP Technologies shareholders have gained 282% (in total) over the last year. That's better than the annualized TSR of 19% over the last three years. The improving returns to shareholders suggests the stock is becoming more popular with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. To that end, you should learn about the 6 warning signs we've spotted with CCP Technologies (including 2 which is are potentially serious) .
But note: CCP Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
