While the S&P/ASX 200 (Index: ^AXJO) (ASX:XJO) declined by more than 3.5% in September, there were a number of stocks that recorded double-digit gains.
Northern Star Resources Ltd
Norther Star has been one of the few resource stocks on the entire market to deliver positive shareholder returns over the past five years. Over the past 12 months, the share price has rallied from $1.20 all the way to today’s price of $3.20 – a capital gain of 167% and that does not even include the 5 cent dividend it has paid over the year.
In September alone, the share price climbed more than 32% and has continued this uptrend into October. A higher Australian dollar gold price, lower production costs and improved production capacity have all benefited the company over recent years and the recent spike in the spot gold price has given Northern Star’s share price another boost.
It remains one of the lowest cost gold producers on the market and is now operating on a profit margin of close to AUD $600/oz. Northern Star is also one of the few gold producers which has been able to pay a consistent dividend and carries no debt on its balance sheet.
Personally, I tend to avoid companies in the resources sector for the simple fact they cannot determine their product selling price, but if I had to choose one company in the sector, Northern Star appears relatively attractive.
STW Communications Group Ltd
Over the past two years, STW Communications’ share price performance has been the polar opposite to that of Northern Star. The value of the company has fallen by more than 60% as it struggles to cope with the new era of digital and social advertising.
The company released another set of disappointing half-year results in August and the share price was pushed close its 52-week low of 50.5 cents.
Although there wasn’t any price sensitive information released in September other than its booting from the S&P/ASX All Australian 200 Index, it appears bargain hunters took an opportunity to pick up shares at the lows and pushed the share price nearly 16% higher.
The shares may still appear undervalued to some investors, trading at around 7x earnings, but STW Communications still faces a number of industry headwinds and is yet to fully implement the objectives of a significant restructuring program.
It’s been a bumpy ride for Greencross shareholders over the past 12 months with the share price halving in value from a high of $9.90 all the way down to $4.95.
The market has been concerned about its acquisition strategy and softening demand for its veterinary products and services in the mining states of Western Australia and Queensland.
Despite this, Greencross recently reported a 43% increase in earnings per share and 36% increase in its dividend in FY15. This temporarily boosted the share price before the announcement that the CEO was leaving resulted in another plunge in the share price.
Since the start of September however, the share price has managed to gain more than 23% and appears to be finally consolidating as investors look forward to another strong year in FY16.
Although the stock is trading at around 19x FY15 earnings, I believe Greencross still offers great value for long term investors as the demand for animal care continues to grow at a solid rate.