Yahoo Finance If You Had Bought Silex Systems (ASX:SLX) Stock A Year Ago, You Could Pocket A 132% Gain Today
Unless you borrow money to invest, the potential losses are limited. But if you pick the right stock, you can make a lot more than 100%. For example, the Silex Systems Limited (ASX:SLX) share price has soared 132% return in just a single year. Better yet, the share price has risen 18% in the last week. On the other hand, longer term shareholders have had a tougher run, with the stock falling 1.3% in three years.
See our latest analysis for Silex Systems
With just AU$958,879 worth of revenue in twelve months, we don't think the market considers Silex Systems 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 Silex Systems will significantly advance the business plan before too long.
We think companies that have neither significant revenues nor profits are pretty high risk. There is almost always a chance they will need to raise more capital, and their progress - and share price - will dictate how dilutive that is to current holders. While some such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt. Silex Systems has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.
When it last reported its balance sheet in June 2019, Silex Systems could boast a strong position, with cash in excess of all liabilities of AU$34m. This gives management the flexibility to drive business growth, without worrying too much about cash reserves. And given that the share price has shot up 89% in the last year , its fair to say investors are liking management's vision for the future. The image below shows how Silex Systems's balance sheet has changed over time; if you want to see the precise values, simply click on the image. The image below shows how Silex Systems'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. 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
We're pleased to report that Silex Systems shareholders have received a total shareholder return of 132% over one year. That certainly beats the loss of about 7.1% per year over the last half decade. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. 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.
If you are like me, then you will 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 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.
