3 small-cap high flyers? Boohoo.Com plc, AFC Energy plc and Blinkx plc

Should you pile into these 3 smaller companies right now? Boohoo.Com plc (LON: BOO), AFC Energy plc (LON: AFC) and Blinkx plc (LON: BLNX).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in online fashion retailer Boohoo (LSE: BOO) have soared by 30% since the start of the year. A key reason for this is the company’s upbeat future prospects, with it forecast to increase earnings by 28% in the current year and by a further 23% next year. When combined with a price-to-earnings (P/E) ratio of 33, this puts Boohoo on a price-to-earnings-growth (PEG) ratio of around 1.3, which indicates that there’s considerable capital growth potential on the cards.

Where Boohoo has an advantage over a number of its online peers is with regards to customer loyalty. Boohoo sells its own line of clothing and while it may not have huge pricing potential due to it being at the mid-to-lower price level, it does command a degree of customer loyalty. This should mean that Boohoo’s sales performance is relatively robust and perhaps more consistent than peers that are sellers of branded goods. And with the UK and world economies offering upbeat long-term growth prospects, Boohoo could prove to be an excellent buy in the coming years.

Strategy progress

Similarly, AFC Energy (LSE: AFC) has considerable long-term potential. Although its share price has slumped by 33% since the turn of the year, it continues to make encouraging progress with its strategy. And with 2015 having been such a transformational year for the hydrogen fuel cell specialist, its recent share price fall could be a case of profit-taking from investors who are still sitting on gains of 48% since the start of 2015.

Looking ahead, AFC has considerable potential to deliver high levels of profitability in a world where cleaner energy is likely to be demanded in greater quantities. As such, the fact that it’s forecast to be lossmaking in each of the next two years may add to the company’s risk, but AFC also has the potential to deliver upbeat share price performance if news flow surrounding its eight 2016 milestones is positive.

This was the case in 2015 as the company derisked its proprietary fuel cell technology and while it remains a small and relatively high-risk stock, it could be of interest to less risk-averse investors.

Tough times

Meanwhile, online advertising specialist Blinkx (LSE: BLNX) continues to disappoint, with its shares being down 2% since the turn of the year. That’s despite the company making significant progress with its restructuring and efficiency measures, with it reporting that over $40m had been eliminated from its annual expenses in its most recent update.

In spite of this cost control, Blinkx remains lossmaking. Looking ahead, it’s expected to remain so in the current financial year and while its strategy seems to be sound and has included a successful rebranding, it may be wise for investors to await evidence of profitability before buying a slice of the business. After all, that’s what the market appears to be waiting for and without a black bottom line, Blinkx may struggle to ignite investor interest over the medium term.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of AFC Energy. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Can this FTSE 250 underperformer turn things around in 2025?

After underperforming since its IPO, shares in Dr Martens have finally started to show some life. Is 2025 the year…

Read more »

Investing Articles

Here’s what £20,000 invested in Rolls-Royce shares at the start of 2024 is worth today

2024 was another brilliant year for Rolls-Royce shares, which almost doubled investors' money. Harvey Jones now wonders if the excitement…

Read more »

Investing Articles

Ahead of its merger with Three, is Vodafone’s share price worth a punt?

The Vodafone share price continues to fall despite the firm’s deal to merge with Three being approved. Could this be…

Read more »

Dividend Shares

3 simple passive income investment ideas to consider for 2025

It’s never been easier to generate passive income from the stock market. Here are three straightforward investment strategies to consider…

Read more »

Investing Articles

I was wrong about the IAG share price last year. Should I buy it in 2025?

The IAG share price soared in 2024 and analysts are expecting more of the same in 2025. So should Stephen…

Read more »

Investing Articles

Here’s the dividend forecast for National Grid shares through to 2027

After a volatile 12 months, National Grid shares are expected to provide a dividend yield of 4.8% for the company’s…

Read more »

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Growth Shares

2 exceptional growth funds that beat Scottish Mortgage shares in 2024

Scottish Mortgage shares generated double-digit returns for investors in 2024. But these two growth-focused investment funds did much better.

Read more »

Investing Articles

If a 40-year-old put £500 a month in S&P 500 shares, here’s what they could have by retirement

A regular investment in S&P 500 shares could help a middle-aged person build a million-pound portfolio. Royston Wild explains.

Read more »