Do you reconsider buying a stock if the share price has already risen 20%, 30% or even 40% in a short time period? Investors can occasionally be burnt by companies that rise quickly and fall straight back to earth. However, buying companies that have recently delivered a bumper earnings report or announced a significant change in the business can be a great way to see immediate gains in the share price.
Importantly, it's imperative that the company also has a bright outlook, as long-term profits are only realised through long-term growth. Here are three companies that have made investors rich already but still offer plenty of long-term upside:
Blackmores Limited (ASX: BKL) shares have increased by nearly 50% over the past 12 months owing to a strengthening outlook on the back of a successful start expanding into Asia. Management halted a drop in profit last financial year to record a 2% rise in profit when most analysts were expecting a fall.
Blackmores revenue jumped 6% year on year, driven by growth in the group's animal range and a return to growth in the Australian business. Analysts expect net profit to rise again this financial year driven by continued cost cutting in the Australian business and growth in the group's Asian and animal products segments. Blackmores is also expected to deliver a grossed-up dividend yield of 6.3%.
The share price of NIB Holdings Limited (ASX: NHF) has steadily risen from $1.50 in early 2013 to the current price of $3.30, but it's not too late to buy. The group has benefitted from the government's push for greater private health insurance coverage and has been able to steadily increase premiums to maintain margins.
Analysts expect the company to deliver high-single digit percentage growth in profit over the next two years, which should allow the dividend payout to rise consistently to sustain a grossed up yield of above 5%. The group is also a potential takeover target for some of the larger insurers like the soon-to-be-listed Medibank Private.
Finally, M2 Group Ltd (ASX: MTU) has risen a massive 25% over the last six weeks after the company delivered a bumper earnings report for the 2013-14 financial year that featured a 50% jump in net profit and revenue of over $1 billion for the first time. Organic growth of around 8% is expected this financial year which should sustain the current share price and attract the interest of fund managers and investors. The share price has fallen back from the recent high of $8.07 and could represent a buying opportunity.
