When investors put their money into revenue-generating businesses, they usually end up getting a decent return on their investments. If the business has yet to become a money-making machine, however, a decision on buying its stock is equal to throwing caution to the winds. Which scenario does Mexus Gold US (PINK:MXSG
, MXSG message board
) pertain to?
To begin with, MXSG is an exploration stage mining company focused on evaluating, acquiring and exploring gold, silver and copper properties in the West.
At least, this has been the company's top priority since September, 2009 when it changed its business. Prior to that, the company had already changed course in 2005 after waiting fifteen years to do so. Altogether, MXSG has now officially entered its 23rd year in exploration stage.
Fundamentally speaking, MXSG has a long way to go before turning profitable. Having incurred an average net loss of $1.44 million for the last three fiscal years on record, the company's financial state is unenviable at best. While MXSG's core assets have been evaluated at $1.9 million, their intrinsic value is hard to calculate as they have not produced any material results yet.
Technically speaking, however, MXSG looks like one of the hottest penny stocks of the week. Having registered four positive sessions in a row, MXSG has now landed at a six-month high of $0.57 per share showing no signs of slowing down. Yet, the momentum does seem to be subsiding as the Relative Strength Index has already cracked the 80% level deeming the stock way overbought.
Investors who are willing to jump on the MXSG bandwagon are advised to exercise caution when building up their investment portfolios. The stock is overbought. And overvalued, too. At present, MXSG's current market cap, i.e approx. $108 million, is 54 times higher than the total assets of the company.