As Fraud Prevention Month in Canada draws to a close, Orefinders Resources’ (TSXV: ORX) – a company that operates in Kirkland Lake, Ontario, with publicly traded penny stock, previously featured by The Inquisitr – recent activity is examined, along with the performance of the 10 worst penny stocks in Canada in the first quarter of 2016.
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Canada has produced many companies with great stocks. Great is a subjective term, but Dollarama Inc. (TSE: DOL) would seem to fit the bill. Yesterday morning, the wildly successful discount retailer reported EPS that grew from $0.76 in the first quarter of 2015 to $1.00 in the first quarter of 2016, handily beating the street consensus of $0.93, as reported by PR Newswire via Yahoo Finance. Dollarama also reported gross sales of $766.5 million, up 14.6 percent year-over-year; the street had been looking for $751.6 million. Traders reacted by vaulting the price of the shares close to 7.5 percent, on volume almost three times the stock’s daily average.
Dollarama also boasts an ultra strong return on equity of 54.6 percent. The only downside to the stock is that it is only listed in Toronto, not in New York or on the NASDAQ, and its debt is higher than optimal. Dollarama reports a debt to equity ratio of 127.6 percent.
That story behind Dollarama, and why traders might compete with each and send prices to near all-time highs, makes sense. Dollarama has both strong sales and profit growth, the most important factors behind the performance of any stock. Attempting to increase a company’s sales and profits are the main priority, as well as the fiduciary duty, of most management teams. The management at Dollarama has, unquestionably, proven effective at growing both sales and profits; the market has rewarded the team in a manner consistent with this.
“The most important factor that affects the value of a company is its earnings. Earnings are the profit a company makes, and in the long run no company can survive without them. It makes sense when you think about it. If a company never makes money, it isn’t going to stay in business,” reports Investopedia.
Quite the opposite of Dollarama, Canada has also produced a great number of questionable companies; companies with no sales and no earnings.
When The Inquisitr first examined Orefinders Resources in early March, shares in the company were quoted as being down over 98 percent since early 2013. Since then, Orefinders has reported that it has “exercised its option and acquired the MZ group of claims which include ten claims that form the westerly extension of the Mirado mineralized zone,” as reported by Market Wired via Yahoo Finance, and shares have rallied so that they are now down only 93.2 percent since early 2013.
Nowhere in the recent Orefinders release are sales, revenues, profits, or earnings discussed. Another company that operates in the Kirkland Lake area, also involved in mining, which like Dollarama, and unlike Orefinders, has sales and profits, is Kirkland Lake Gold Inc. (TSE: KGI).
The fact that, in the days following The Inquisitr piece, Orefinders shares rallied several hundred percent, coming back from almost not trading entirely for months, then found a top, two days after the latest release by the company – the first with regard to the penny stock since November 2015, as reported by Market Wired via Yahoo Finance – and given that no news with regard to sales or profits has been forthcoming, may be seen as puzzling.
Todd Morgan, the former CEO of another no-sales, no-earnings firm with Kirkland Lake ties, Kerr Mines Inc. (formerly Armistice Resources) (TSE: KER), previously featured by the Inquisitr, regularly sits in on meetings of the Kirkland Lake Town Council, listed as being located just five minutes’ walk from Orefinders’ listed Yellow Pages Kirkland Lake, a somewhat isolated town with a population of near 8,500, address of 58 Prospect Ave.
An inquiry made with Orefinders’ investor relations – seeking future revenue and profit guidance, as well as information on analyst coverage – has been met with no response.
Similar to Orefinders, shares of Kerr have rallied since being featured with The Inquisitr in early March, coming back from almost not trading entirely, with news of a possible delisting being reported on March 9 by PR Newswire via Yahoo Finance. Also as with Orefinders, reports of revenue or earnings guidance from Kerr management remain elusive.
Despite being down significantly over longer time frames, shares in Kerr Mines and Orefinders didn’t make the first quarter 2016 list of worst-performing penny stocks, in Canada, as reported by the Morningstar stock screener.
The tenth through fifth worst-performing penny stocks of 2016 each are down in value by 75 percent; since two other stocks, ranking eleventh and twelfth respectively, are also down 75 percent, they are also included.
Ten Worst Performing Canadian Penny Stocks In 2016
Desert Star Resources Ltd. (TSXV: DSR), down 75.0 percent.
Prospector Resources Corp. (TSXV: PRR), down 75.0 percent, no longer quoted.
Greenshield Explorations Limited (TSXV: GRX-H), down 75.0 percent.
Zara Resources Inc. (CSE: ZRI), down 75.0 percent.
Boomergang Oil, Inc. (CSE: BOI), down 75.0 percent.
Everfront Venture Corp. (TSXV: EVC-H), down 75.0 percent.
Sunvest Minerals Corp. (TSXV: SRK), down 75.0 percent.
Telesta Therapeutics Inc. (TSE: TST), down 76.5 percent.
BRS Ventures Ltd. (TSXV: BRV-H), down 83.3 percent.
Standard Tolling Corp. (TSXV: TON), down 87.5 percent.
Leo Resources Inc. (TSXV: LEO), down 90.0 percent.
The worst performing penny stock in Canada in the first quarter of 2016 is Mississauga’s 01 Communique Laboratory Inc. (TSXV: ONE); the company witnessed its shares fall in value by 92.6 percent in just the first three months of 2016.
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