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 Patriot One Technologies Inc. (TSE:PAT) share price is up 35% in the last year, clearly besting than the market return of around -1.2% (not including dividends). So that should have shareholders smiling. We'll need to follow Patriot One Technologies for a while to get a better sense of its share price trend, since it hasn't been listed for particularly long.
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With zero revenue generated over twelve months, we don't think that Patriot One Technologies has proved its business plan yet. 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. It seems likely some shareholders believe that Patriot One 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. 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 such companies go on to make revenue, profits, and generate value, others get hyped up by hopeful naifs before eventually going bankrupt.
Patriot One Technologies has plenty of cash in the bank, with cash in excess of all liabilities sitting at CA$69m, when it last reported (January 2019). That allows management to focus on growing the business, and not worry too much about raising capital. And with the share price up 35% in the last year, the market is focussed on that blue sky potential. You can click on the image below to see (in greater detail) how Patriot One 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. One thing you can do is check if company insiders are buying shares. If they are buying a significant amount of shares, that's certainly a good thing. You can click here to see if there are insiders buying.
A Different Perspective
Patriot One Technologies boasts a total shareholder return of 35% for the last year. Unfortunately the share price is down 5.0% over the last quarter. Shorter term share price moves often don't signify much about the business itself. If you would like to research Patriot One Technologies in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
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 firstname.lastname@example.org. 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.