3 stocks to deliver standout returns in 2015

Often in company trading updates and annual reports, investors will be given a ballpark figure for expected profit and revenue for the following year based on prevailing market conditions and company performance. This is part of the company’s continuous disclosure obligations and ensures that shareholders are notified well in advance of positive or negative company changes, allowing them to reorganise their portfolio as necessary.

Usually, these announcements are taken on board by the market and factored into a share’s price pretty rapidly, which can make it hard to find value. Just sometimes though, the announcements are ignored and individuals who invest for the future have the opportunity to snap up some bargains. When the share is already trading at a discount, as two of the following are, the opportunity is even more appealing.

Alliance Aviation Services Limited (ASX: AQZ)

Although FY14 results won’t be released until around August, Alliance indicated in February that this year’s results will be poor owing to later than expected starts of new contracts. Alliance should earn $12 million -$13 million this year, down from $23 million and $19.6 million in 2013 and 2012 respectively. However, profit for 2015 is expected to be between $18 million – $21 million, and Alliance is just coming off a 52-week low of $1.12. This gives it a P/E ratio of around 5.5, and with a majority of earnings coming via contracted revenue, Alliance can make this statement with some certainty. 80% of existing contracts (at June 2014) run until at least June 2016 and the company is continually bidding for more work. Not a buy for the long-term investor, but a 12-month purchase could see impressive price growth and is something I am considering myself.

The Reject Shop Ltd (ASX: TRS)

The Reject Shop is the one company in this article where management has not flagged a significant improvement next year. Still, with its share price down 40% for the year on flat same-store sales and a reduced profit figure (due to the costs of opening new stores), I get the feeling investors have missed the point. Sales growth of 17.7% was promising and it seems strange to sell out of a company because they spent profits opening new stores which will improve earnings in future years. Underlying NPAT growth of 1.6% was not stellar, but I think that with their strong cash position and continual focus on improving performance – not to mention a 40% haircut – The Reject Shop could deliver very strong price performance in 2015.

Fisher Paykel Healthcare Corp Ltd (ASX: FPH)

Fisher Paykel looks to be fully valued at the moment; however its latest results announcement indicates another year of 40% constant-currency profit growth for FY2015 after an improvement of 46% this year. With its share price up 53% in the past twelve months, there could still be a lot further to run in the next twelve. It’s important to note that actual profit figures will be lower due to varying currency exchange rates, however as Fisher Paykel expands and conducts more of its operations in local currencies; currency conversion will begin to work back in its favour. With a number of macroeconomic factors working in its favour as well, Fisher Paykel looks like a buy for the short-term trader and long-term investor alike.

Shares with cheap prices and strong growth prospects are the best way to grow your wealth – I already own shares in The Reject Shop and I’m strongly considering a purchase of Fisher/Paykel and Alliance. If they don’t tickle your fancy however, more high growth ideas are just a few clicks away with The Motley Fool’s free report here:

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Motley Fool contributor Sean O'Neill owns shares in The Reject Shop.

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