Shareholders of Sirius Minerals (LSE: SXX) have enjoyed a good 2015 so far. That’s because the shares are up 67% since the start of the year. The big news is that the company has recently been given the green light to develop a huge potash mine within the North York Moors National Park.
Sirius today released an update on the latest results from its ongoing global crop study programme. As with previous trials on other crops, today’s results demonstrated the yield and financial benefits of polyhalite as a fertilizer for corn and soybean.
Sirius is a long way from making money; it has no revenue at this stage, far less profit. Despite this, at a current share price of 17.5p, the company is valued at £388m in the market today, on the strength of its potential to make £billions in the decades to come. Financing and delivering the project are the challenges ahead, but the management team has done a great job so far, and the long-term rewards for investors today could be substantial.
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Fresnillo
Precious metals miner Fresnillo (LSE: FRES) announced its half-year results today. The world’s largest silver producer reported increased volumes, but an adverse impact from significantly lower prices. Profit of $76m was down 44% on the same period last year.
However, the company continues to generate significant cash from operations — $315m during the period — and cash and short-term investments at the period end stood at $476m. Fresnillo’s robust balance sheet, together with its high-quality, low-cost assets and its pipeline of development and exploration projects, puts it in a strong position even in the current challenging market.
With precious metals prices continuing to be volatile, Fresnillo’s shares could remain under pressure. However, with the shares having reached a peak of over £20 in 2011, and been above £10 as recently as a year ago, today’s price of under £6.50 could be a rewarding entry point for investors with a long-term horizon.
Travis Perkins
The course of the share price of builders’ merchant Travis Perkins (LSE: TPK) has been the opposite to that of Fresnillo. In the period over which Fresnillo’s shares have fallen from over £20, Travis Perkins’ shares have soared over 200%.
The company continues to benefit from the strong housebuilding market, as well as repair, maintenance and improvement activity. In today’s first-half results, Travis Perkins reported a 7.8% rise in revenue, although an increase in financing costs crimped profit growth, with the company reporting a bottom-line rise of 2.9%.
Nevertheless, the company said: “We continue to anticipate a full year result in line with expectations and delivering against our targets including low double-digit profit growth and sales outperformance of our markets”. At a current share price of a little under £22, the forward price-to-earnings (P/E) ratio of 16.5 looks fair, rather than outstanding value for the growth profile.
Just Eat
If you’re looking for super-charged growth, look no further than Just Eat (LSE: JE), the world’s leading digital marketplace for takeaway food. The company today reported first-half revenue growth of 54% and earnings growth of 42%. You certainly have to pay for that level of growth, though, with the forward P/E being around 75!
However, Just Eat is a genuine growth company. Market leadership, increasing scale, scope for further geographical expansion and a highly efficient cash-generating business model — collecting the gross order value ahead of making twice-monthly net payments to the restaurants — are all hugely attractive qualities.
The current earnings growth rate, which is actually forecast to increase in the near-term, suggests the P/E of 75 is not as outrageous as it might appear at first sight. Indeed, I think Just Eat is one of the best of the higher-rated companies in the market today, and could be worth paying £4-odd for.
