Despite ongoing market see-saws, investor re-evaluation of companies in the aftermath of their latest results continues with a number of surprising new entrants into the 52-week highs and low lists this week.
Some of the price moves are justified, and some most definitely are not. Here's what you need to know about the recent price strength at:
Austal Limited (ASX: ASB) – last traded at $2.11, up 57% for the year
Global defence contractor and shipbuilder Austal has experienced another strong year, delivering record earnings and revenue and beating market expectations to boot. Strangely enough shares sank on the news before subsequently rising 10% in the past week, to their current high point.
I'm of the opinion Austal shares will rise in the next 12 months based on their modest price, recent strong performance and the likelihood of winning more work. However, margins are thin and I advise investors to remember that demand for its work depends on defence expenditure at its major customers.
As a percentage of GDP, Australia's defence expenditure is rising, but even so this is not a company for investors not willing to look at the nitty gritty of contracts, defence 'white papers' and so on.
Hub24 Ltd (ASX: HUB) – last traded at $2.06, up 81% for the year
Like 1-Page, below, Hub24 is another unprofitable company making big waves with its share price. Most recently, investors bought into the 626% increase in revenue and 32% reduction in net loss after tax.
This increase was largely due to the acquisition of Paragem 12 months ago, which contributed $20.2m of Hub24's $29.3m in revenues. However, Hub also reports great scalability, with Operating Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) rising 151% while costs increased just 45%.
Unlike 1-Page however, I think Hub is much more reasonably valued and with overall profitability likely to arrive soon I suspect its share price will rise further in the next 12 months.
1-Page Ltd (ASX: 1PG) – last traded at $4.82, up 1,621% for the year
As I wrote just last week, hiring consultant 1-Page Ltd has moved beyond all rationality in its pricing, having made just $211,000 in sales for the year to date. Shares continue to soar as investors buy into the theoretical 'someday' when the company is earning millions, but that day is a long way away.
There is also the prospect of competition, as the company's eponymous '1-page' recruiting proposition and algorithms don't seem as though it would be impossible to emulate. While I think the company has potential, there are far better ways to invest your money right now.
