These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Azimut Exploration Inc. (CVE:AZM) share price is 54% higher than it was a year ago, much better than the market return of around -1.8% (not including dividends) in the same period. That's a solid performance by our standards! Unfortunately the longer term returns are not so good, with the stock falling 31% in the last three years.

View our latest analysis for Azimut Exploration

Azimut Exploration recorded just CA$160,498 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 Azimut Exploration will find or develop a valuable new mine before too long.

We think companies that have neither significant revenues nor profits are pretty high risk. 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. Azimut Exploration has already given some investors a taste of the sweet gains that high risk investing can generate, if your timing is right.

When it reported in May 2019 Azimut Exploration had minimal cash in excess of all liabilities consider its expenditure: just CA$832k 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 54% in the last year, despite the weak balance sheet. You can see in the image below, how Azimut Exploration'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 Azimut Exploration's cash levels have changed over time.

It can be extremely risky to invest in a company that doesn't even have revenue. There's no way to know its value easily. However you can take a look at whether insiders have been buying up 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

It's good to see that Azimut Exploration has rewarded shareholders with a total shareholder return of 54% in the last twelve months. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4.6% 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. If you would like to research Azimut Exploration in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.

Of course Azimut Exploration may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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.