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If you love investing in stocks you're bound to buy some losers. But the long term shareholders of Blue Star Gold Corp. (CVE:BAU) have had an unfortunate run in the last three years. So they might be feeling emotional about the 53% share price collapse, in that time. The good news is that the stock is up 17% in the last week.

View our latest analysis for Blue Star Gold

Blue Star Gold didn't have any revenue in the last year, so it's fair to say it doesn't yet have a proven product (or at least not one people are paying for). We can't help wondering why it's publicly listed so early in its journey. Are venture capitalists not interested? As a result, we think it's unlikely shareholders are paying much attention to current revenue, but rather speculating on growth in the years to come. For example, investors may be hoping that Blue Star Gold finds some valuable resources, before it runs out of money.

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 companies like this go on to deliver on their plan, making good money for shareholders, many end in painful losses and eventual de-listing. Blue Star Gold has already given some investors a taste of the bitter losses that high risk investing can cause.

Our data indicates that Blue Star Gold had CA$750,050 more in total liabilities than it had cash, when it last reported in February 2019. That makes it extremely high risk, in our view. But since the share price has dived -22% per year, over 3 years, it looks like some investors think it's time to abandon ship, so to speak. You can see in the image below, how Blue Star Gold's cash levels have changed over time (click to see the values).

In reality it's hard to have much certainty when valuing a business that has neither revenue or profit. What if insiders are ditching the stock hand over fist? I'd like that just about as much as I like to drink milk and fruit juice mixed together. It only takes a moment for you to check whether we have identified any insider sales recently.

A Different Perspective

We're pleased to report that Blue Star Gold shareholders have received a total shareholder return of 17% over one year. Notably the five-year annualised TSR loss of 2.6% per year compares very unfavourably with the recent share price performance. This makes us a little wary, but the business might have turned around its fortunes. You might want to assess this data-rich visualization of its earnings, revenue and cash flow.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on CA exchanges.

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.

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. Thank you for reading.