Despite the massive sell-off and subsequent recovery of the market earlier this week, earnings season continues to sort the good from the not-so-good – or rather, the in-favour from the out-of-favour.
All three of this week's 52-week highs are in favour and for good reason, although whether they can continue their meteoric rise remains to be seen:
Speedcast International Ltd (ASX: SDA) – last traded at $3.93, up 96% for the year
Shares in Speedcast have taken off in recent weeks after the announcement that the company bought most of the assets of NewSat Limited.
Subsequently, Speedcast announced a major contract win with InterOil, the acquisition of Hermes Datacommunications (managed network solutions provider) and a 32% lift in revenue as well as its maiden profit and dividend yesterday.
With all this success it is no surprise that shares in Speedcast have almost doubled over the past year, and while I'm not a buyer at today's prices I expect the company to head higher over the next 12 months.
Blackmores Limited (ASX: BKL) – last traded at $100, up 252% for the year
A preliminary final report announcing an 83% increase in profit was all it took to see Blackmores tip over the $100 per share mark yesterday – the first in the ASX200 to do so in quite some time – and it is perhaps fitting that the stock closed squarely at $100.
Blackmores has been aided in no small part by the tiny number of shares on issue – only 17 million – which has caused rapidly rising prices as more and more investors bid for a small number of shares. As an example the daily volume of Blackmores shares has reached 150,000 shares on only five occasions in the past 12 months.
It's difficult to evaluate whether its performance will continue but I think an earnings miss would definitely set the company up to be heavily sold off.
Servcorp Limited (ASX: SRV) – last traded at $6.59, up 34% for the year
Servcorp provides managed and serviced offices around the world and has been a steady and reliable performer over the past five years, during which time its share price has doubled. The most recent rise came on the back of a 26% increase in Net Profit After Tax in 2015 and the forecast of a further 16% lift in 2016.
While Servcorp will likely continue to be a strong performer, I feel that it is priced for success at this point and that there are other long-term companies offering a cheaper price and a better dividend.
