The Razor's Edge

2-Year Price History

A Word Of Caution

Stocks trading for less than $1 are loosely termed "penny" stocks. Capital Reserve Canada Limited (CRSVF) is selling for less than $1 per share. While, we stand by our ratings methodology for long term value investors, often times "penny" stocks will be more volatile. Because many "penny" stocks are lightly traded their stock price can fluctuate because of a single large trade. Also, there is generally less analyst coverage of such "penny" stocks and thus less information from which to base our rating.

Therefore, (and as always), check additional sources and available information regarding Capital Reserve Canada Ltd. before making an investment decision.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

CRSVF Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 5 years. For, CRSVF the high and low end of the Price to Sales per share ratios are 20.17x and 1.60x respectively.

Notice that CRSVF's current Price to Sales per share ratio is 0.33x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $0.01, CRSVF is 97% below where we would expect to see it. This will beneficially factor into our final analysis of CRSVF as it is not often that this stock sinks to these levels.

CRSVF Cash Earnings

Cash (and the ability of a company to generate it) is a pivotal analysis at Ockham Research. With CRSVF, we have found that we don't have as many years of positive Cash Earnings as we would like in order to run an analysis. When a company like CRSVF has had several years of negative Cash Earnings mixed in with their positive years, it can be difficult to really get a good analysis of their potential. At Ockham, we always advise that Cash is key to any investment, so investors should consider the lack of positive years available as a signal that other types of analysis may need to be more heavily relied upon in CRSVF's case.

CRSVF Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for CRSVF to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis. CRSVF is not paying a dividend at this time, nor do they have a history of paying a dividend for the last 10 years plus. Therefore, we are not utilizing the dividends portion in our study. If CRSVF initiates paying a dividend, we will begin to factor this into the Ockham approach.