The new financial year is upon us and that should give investors the opportunity to take a look at what might be the top performers for the year ahead as well as what stocks might continue to struggle.
Here are four stocks that had shockers in FY15 but is it possible they might be star performers in FY16?
Metcash Limited (ASX: MTS)
The value of Metcash more than halved in FY15 but the pain might not be over for shareholders just yet. Earnings are expected to come under more pressure as competition in the supermarket sector increases and reduces Metcash's already slim operating margins.
Despite a number of new stratgeic intiatives to increase sales, management does not expect any significant improvement in FY16. The dividend has also been stopped for the next 12 months and I would suggest investors look for better opportunities elsewhere.
Santos Ltd (ASX: STO)
It was a truly dissapointing FY15 for Santos shareholders. The collapse of the oil price saw the shares get hammered to their lowest level in more than 10 years. Fears around a potential capital raising and the ability of the company to service its substantial debt meant Santos underperformed relative to the other major energy producers.
If the oil price can grind higher in FY16, Santos appears to have the most upside potential in the energy sector. The Gladstone LNG project will be shipping its first cargo this year and this is expected to generate strong cash flows for Santos. If the project runs as expected, shareholders should expect increased dividends with good capital gains. Investors who have a medium risk tolerance should consider adding Santos to their portfolio in FY16.
Greencross Limited (ASX: GXL)
The veterinary services provider had a mixed FY15. The shares hit an all time high of $10.78 in August 2014 before falling into a significant downtrend. Investors became more sceptical about its acquisition strategy and the negative sentiment surrounding Greencross was exacerbated when management lowered earnings guidance. One off supply chain issues and adverse weather conditions were the major causes of the earnings downgrade but investors were not willing to give management the benefit of the doubt.
Pleasingly for Greencross, like for like sales have been strong and the growth outlook still remains positive for the company. With the shares trading below $6, I have taken the opportunity to add to my holdings as I believe Greencross can stage a come-back in FY16.
Ainsworth Game Technology Limited (ASX: AGI)
Ainsworth shares dropped by nearly 30% in FY15 following disappointing sales of its gaming machines in Australia. At the same time, the company achieved impressive international sales growth of 40% which is forecast to continue into FY16.
Management expects to deliver strong organic revenue and profit growth in FY16 as new products released into the domestic market increase market share and accelerate growth. It seems as though the market is taking a wait and see approach but at the current share price I think the upside potential should not be ignored.Looking for an even better stock to maximise your returns in FY16?
