I’m looking today at three stocks that have soared by more than 60% since the start of the year. Why are they flying and is it the right time to pile in?
Highly attractive ratios
Kazakhstan miner Kaz Minerals (LSE: KAZ) has gained 65% so far this year. At a current price of 589p, this FTSE 250 firm is valued at £2.7bn.
In a production report last month, the company said it had met its copper guidance for the year and exceeded its guidance on by-products (gold, silver and zinc).
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Copper output was 73% ahead of the prior year as Kaz ramped up production at its new Bozshakol and Aktogay projects. The company is rapidly developing into a top class, open pit copper miner with revenue expected to double from 2016 to 2017 and earnings forecast to rise by 175%.
This puts Kaz on a forward price-to-earnings (P/E) ratio of 12.6 with a P/E-to-growth (PEG) ratio of less than 0.1. These are highly attractive ratios and remain so if we look ahead to 2018 when the P/E falls to 9.1 and the PEG rises to little more than 0.2. There looks to be considerable scope for the shares to continue rising and they seem very buyable to me at their current level.
A nice little growth stock?
Shares of Premier Veterinary Group (LSE: PVG) have risen 71%, helped by an announcement of further good news this morning, which I’ll come to shortly.
Like Kaz, PVG is listed on the main market. However, it has a ‘Standard’ listing as opposed to the ‘Premium’ listing of top FTSE firms. Disclosure and compliance rules are less rigorous with a standard listing, so it’s wise to treat these companies with a bit of caution.
PVG has undergone a major transformation, selling its veterinary practices to focus on its buying business (which negotiates discounts on animal products to enable independent practices to compete with larger groups). It is also focusing on its high-growth preventative healthcare programme for pets, branded ‘Premier Pet Care Plan’.
The latter business increased its global revenue by 75% last year. Today’s good news is of a new contract, which further increases its penetration of the US market. Before today, the house broker was forecasting £4.35m revenue for 2017 with a pre-tax loss of £2.15m, followed by £8m and a £0.25m profit for 2018. At a share price of 235p the market cap is £35m, giving a price-to-sales (P/S) ratio of 4.4 for 2018. This could be a nice little growth stock but I’d like to see a broker update before deciding whether to look further into the business.
Considerable potential?
Wandisco (LSE: WAND) is the biggest riser. An 81% gain has seen the shares climb to 362.5p, valuing this AIM-listed big data firm at £132m.
In a trading update last month, the company reported record bookings in Q4, which comes on top of previous good progress on agreements, contracts and orders with a number of parties, including blue-chip IBM.
I believe Wandisco has considerable potential but it’s trading on a rich 14.5 times expected 2016 sales, and a still-high P/S of six looking ahead to 2018, at which time it’s also forecast to be still lossmaking. As such, I think this is one to watch for the time being.
