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Is there value in Nextdc Ltd, Medibank Private Ltd, and Pro Medicus Limited shares?

While global stock markets continue to wobble in a perpetual will-they won’t-they over questions like Greece exiting the Eurozone, the US raising rates, Australia cutting rates and many more issues, a number of quiet achievers have defied the gloom and gone on to set new highs.

Here’s my take on whether they still offer value at today’s prices:

Nextdc Ltd (ASX: NXT) – last traded at $2.70, up 8% for the year

Nextdc shares haven’t really gone anywhere in the past 12 months, as investors are still waiting to see how the company’s Data Centre (DC) business scales up. Performance has been strong however, with revenue rising 46%, utilisation up 59%, and a $6.4 million swing to a Net Profit After Tax of $0.6 million, up from a $5.8 million loss previously. Thanks to recent fundraising, Nextdc also has $225 million in cash and has works under way at its ‘M1’, ‘S1’, and ‘C1′ sites, as well as a sites’ shortlist for upcoming projects B2 and M2.

It remains to be seen if Nextdc can earn attractive enough returns to justify the high capital expenditure required by its business model, but the company is scaling up nicely. The downside is that shares are highly priced, although there is also plenty of growth in the pipeline. Worthy of closer investigation by interested investors.

Medibank Private Ltd (ASX: MPL) – last traded at $2.89, up 22% for the year

Medibank shares hit a high of $2.97 earlier this week, with investors quite optimistic about the incoming CEO and recent premium increases. Certainly Medibank is an attractive business, with good recurring demand and significant macro tailwinds from healthcare demand and government initiatives (such as the Medicare levy surcharge). However, Medibank has been losing ground to competitors in its sector and has a number of company – and industry – specific issues to tackle.

With the uncertainty associated with a new CEO, as well as a highly-competitive marketplace, I would call Medibank a ‘Hold’ today.

Pro Medicus Limited (ASX: PME) – last traded at $3.70, up 165% for the year

Pro Medicus catapulted into the spotlight again recently after another significant contract win was announced, this time with Mercy Health in the US. If we double the half-year results to approximate full-year profits, shares trade at a lofty 60 times full-year earnings. However, interested investors should disregard the Price to Earnings (P/E) ratio and focus on the company’s growth, which could just be getting started. Pro Medicus has announced a number of significant contract wins recently, and with management firmly focussed on the US market this number is likely to increase. With favourable foreign currency exposure thrown into the bargain, Pro Medicus is set for a significant increase in its earnings, making the P/E almost irrelevant.

As its product achieves a greater market presence, more contracts are likely to roll in, making Pro Medicus well worth a closer look by interested investors.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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