While the S&P/ASX 100 (Index: ^AXTO) (ASX: XTO) has been relatively flat over the last 12 months, there has been a wide range of performance amongst stocks in the index, with the best 10 performers producing share price gains of 50% or more.
Academic research has shown that the best performing stocks over a 12-month period, and those trading near their 52-weeks highs, often continue to outperform over the next 12 months as well. Of course, this alone is no reason to invest in a company, but it may be a reason to analyse a stock further or to continue holding an investment.
One of the best performers has been gaming machine manufacturer Aristocrat Leisure Limited (ASX: ALL). Shares are sitting near a 52-week high after gains of over 80% in the last year.
Aristocrat upgraded its earnings forecasts in May, expecting 2016 profits to be up around 55% on 2015 following the acquisition of Video Gaming Technologies. Management has also flagged the potential for further acquisitions in the digital space.
Aristocrat currently trades on a P/E ratio of around 26 times its consensus earnings forecast for 2016 and analysts are expecting earnings growth of around 40% for the next few years.
After a share price run-up of nearly 50% in the last three months, in my view, the current price of $15.35 represents a risky entry point for new investors.
Vocus Communications Limited (ASX: VOC) is up nearly 50% in the last 12 months.
Vocus has been a consistently strong performer over the last decade as it has grown to become a significant player in the telecommunications industry after a series of mergers and acquisitions.
It recently announced the acquisition of Nextgen Networks, which is expected to provide substantial synergies and is well supported by shareholders. The deal is subject to approval from the Australian Competition and Consumer Commission (ACCC) with a decision expected in September this year.
Vocus is due to report on 25 August. Consensus estimates are for earnings of 30 cents per share (cps), implying a P/E ratio of around 29. This appears to be reasonable value for a company well placed to benefit from the booming demand for data.
Shares in Treasury Wine Estates Ltd (ASX: TWE) have risen around 80% in the last year.
As Australia's largest owner of wine brands, the company is well placed to benefit from the growing demand for premium wine products in Asia, particularly China.
Treasury is due to report on 18 August. Analyst consensus is for earnings of 31 cps, suggesting a P/E ratio of around 31.
Shares are not cheap, however in my view, Treasury could continue to be a strong performer for the next decade.
