Shares in healthcare company Circle Holdings (LSE: CIRC) have soared by as much as 40% today after the company released a statement to say it knows of no reason for the recent fall in its share price. This seems to have significantly shifted investor sentiment in the stock, which had been extremely weak in recent months and had contributed to a fall in Circle Holdings’ share price of 67% in the last year.
Looking ahead, Circle Holdings is expected to remain a lossmaking company in the current year, but its losses are due to narrow. For example, they stood at £20m on a pre-tax basis in 2014 but are set to fall to £6m in the current year. This progress could cause investor sentiment to improve yet further, but with a number of other profitable businesses on offer in the healthcare space, it may be prudent to watch rather than buy Circle Holdings at the present time. That’s especially the case since its shares seem likely to remain volatile.
Gains ahead?
Also posting share price declines in the last year is Standard Chartered (LSE: STAN). The Asia-focused bank’s valuation has slumped by 50% in the last 12 months and with Chinese growth rates coming under increasing pressure, further falls can’t be ruled out in the short run.
However, looking further ahead Standard Chartered has huge growth potential. It has a refreshed strategy under a new, streamlined management team that’s likely to improve its profitability in the medium-to-long term. For example, earnings are due to rise by 28% this year and if that figure is delivered, investor sentiment towards Standard Chartered could change dramatically.
Furthermore, with Asia continuing to offer excellent long-term growth prospects, Standard Chartered is well-placed to benefit. With its fundraising shoring up its financial position, it seems to be in a strong position, while its price-to-earnings (P/E) ratio of 9.7 indicates that share price gains are likely in the coming years.
Opportunity knocks?
With the oil price having collapsed in the last two years, it’s of little surprise that Premier Oil’s (LSE: PMO) share price has followed suit, with the North Sea-focused oil producer having recorded a fall in its valuation of 87% in the last 12 months.
Looking ahead, a further fall in the price of oil is relatively likely since there’s no sign of supply being cut as many oil producers have costs per barrel of sub-$20. With Saudi Arabia stubbornly sticking to its apparent strategy of attempting to hurt US shale producers and Iran set to increase production after sanctions are lifted, the near-term prospects for oil are downbeat despite its recent surge.
For Premier Oil, this presents an opportunity to buy high quality assets at discounted prices. Its purchase of Eon’s North Sea assets could produce a more profitable and diverse business in future years and once its share suspension has been lifted, less risk-averse investors may wish to take a closer look at Premier Oil.
