'Price is what you pay. Value is what you get' – Warren Buffett.
Given that prices swing wildly throughout the year but value often only changes modestly, finding a place where the two converge can be extraordinarily difficult.
These three companies have hit their highest point all year in recent weeks, and in all three cases the rise is both well deserved and leaves plenty of room for improvement in the future.
Here's what you need to know about these three rising stars:
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) – last traded at $4.95, up 61.77% in the past year
Back in May I picked Fisher & Paykel to be one of my standout winners in FY15, and the company is on track so far with a forecast 14% increase in revenue and a 60% increase in constant-currency profit predicted for the first half.
Given recent further declines in the value of the NZ$ against the US$, the company recently upgraded its earnings forecast by an additional 3% to NZ$100 million.
Analysts at Morningstar believe the company is actually understating its profit and that the rewards could be even greater than forecast.
Despite the recent price rises, Fisher and Paykel appears fairly valued and I expect the company could rise further as investor interest grows.
Retail Food Group Limited (ASX: RFG) – last traded at $5.61, up 22.49% in the past year
Retail Food Group has leapt 16% in recent days after the company announced the acquisition of Gloria Jeans, to be funded by a $55 million placement at a price of $4.80.
The acquisition is fantastically complementary to RFG's existing businesses and is expected to increase earnings by roughly one third, meaning the company could be undervalued despite its recent 16% price rise.
However, there is significant uncertainty regarding the integration of the new acquisitions – for instance, what happens when there is a Gloria Jean's chain open in the same location as a Jean Michel's Patisserie? Will competing businesses coexist or will some be shut down or cannibalised?
This uncertainty is likely the reason Retail Food Group looks undervalued and confident investors might do well by investing now.
Paying a 4.1% dividend, Retail Food Group should see some explosive growth if it can successfully integrate the two businesses and I wouldn't bet against the share price heading higher in the near future.
CSL Limited (ASX: CSL) – last traded at $79.16, up 15.56% in the past year
Global blood plasma giant CSL recently announced yet another share buyback, in addition to six previous ones in the past eight years.
Combined with the recent purchase of Novartis's (NYSE: NVS) influenza vaccine business – a purchase that will catapult CSL to the world's #2 vaccine producer – and it's no surprise investors have piled onto the rising elevator that is CSL.
With 10-year shareholder returns of 724%, not counting dividends, CSL is an excellent long-term investment and the company's continued investment in new products and capital management is a big tick for the future.
I think CSL may rise a little further before its price peak, but investors should continue to see solid improvement over the medium to long term.
But wait, there's more…
There's one more 52-week high you need to know about… and it's even cheaper than these three prospects.
