As earnings season hits its straps several businesses are flying higher on the back of strong half-year results or brightening outlooks, although the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) closed marginally lower today as the big banks were sold off. However, the four businesses below all performed outstandingly and it's worth considering whether they have further to run.
Mesoblast limited (ASX: MSB) is a regenerative medicine business that today announced it has been granted a patent by the U.S. regulator for a product intended to be used in the treatment of degenerated intervertebral discs.
The stock has lifted 4.2% on the news, but is still down more than 21% over the past year as investors' faith in the company's ability to translate potential into revenues begins to waiver. If Mesoblast is able to commercialise its therapies for common diseases and medical complaints the share price could turn explosive. That's a big if though and for now the stock looks one to keep at the top of the watchlist.
Slater & Gordon Limited (ASX: SGH) today announced its half-year results for the six months ending December 31, 2014. The company delivered a half-year net profit of $33.7 million on revenues of $245.3 million and continues to retain a bright outlook based on its growth opportunities in the UK market.
It also looks likely to benefit from the falling Aussie dollar as around half of earnings are generated overseas. Investors celebrated today's result by bidding the stock up 8.6% to $7.18, the re-rating likely a result of the market revising its assumptions about the company's progress in the UK market.
Capitol Health Ltd (ASX: CAJ) is similar to Slater & Gordon as a roll-up style business with gangbuster growth based on ballooning earnings and a positive outlook. Capitol has been rolling-up diagnostic imaging medical businesses and today climbed 8.7% to hit a record high of 93.5 cents despite releasing no news to the market.
Given Capitol Health's potential to expand outside its core Victorian market and fact it enjoys the natural tailwinds of healthcare businesses it looks one to watch.
Phytotech Medical Ltd (ASX: PYL) is a recently-listed medical marijuana business that hit an incredible high of 91 cents just days after hitting the ASX boards in January with an IPO price of 20 cents. The stock has since dropped back to 30.5 cents, although it did gain more than 7% today.
Presumably long-term investors think it may be able to capitalise on growing demand for medical cannabis, but given the price volatility and considerable risks this looks one to watch from the sidelines.
