Now we're past the reporting season, we can ask how did ASX companies perform? The ABC news website reported on how many companies had bigger or smaller earnings than a year ago. Based on data from AMP Capital, currently 66% of companies had greater profits than 12 months ago and 62% increased dividends. 55% of reported results beat market expectations.
The Australian economy isn't booming, but the ASX is relatively stable and is benefiting from overseas markets, especially the US, making further highs.
Some stocks popped up on good news, others tanked on flat or bad results. Among the stocks in the S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) that saw strong share price gains in the past month, three stocks in particular stuck out for me.
Sirtex Medical Limited (ASX: SRX), the producer of a specialised liver cancer treatment, rose strongly during 2014. The company is awaiting clinical trial results in the US which may lead to a big expansion in sales of its treatment. Separate from the trial results, Sirtex reported a 37.1% and 58.1% gain in half-year revenue and net profits, respectively, just on current production levels.
Law firm Slater & Gordon Limited (ASX: SGH) is up about 13% since the end of January. Following its ongoing plan of acquiring law firms in Australia and the UK to expand its network of practices, the company generated a 46.5% gain in half-year earnings. The UK personal injury legal service market has good prospects for further growth. Slater & Gordon is targeting full-year group revenue of $500 million for financial year 2015, compared to $411 million in financial year 2014.
Flexigroup Limited (ASX: FXL), the financial services company that provides leasing, vendor finance and other payment solutions to consumers and businesses, saw solid growth in the first half of financial year 2015. As mobile payment and online credit provision systems grow, Flexigroup could gain more business and market share.
CEO and managing director Tarek Robbiati said in the company's interim report release, "We are increasingly focused on the digital finance opportunity and are well positioned to become the digital finance leader in Australia and New Zealand. There are fantastic areas to pursue where we are not competing with banks and we are already starting to deliver strong earnings momentum."
Of these three stocks, Sirtex probably will have the biggest business expansion in the near-term, but it's trading at about 60x forward earnings, so I would look for something with a better margin of safety. For long-term growth at a more reasonable price, Slater & Gordon would be my preferred choice.