If you have a stomach for risk and don't shy away in the face of volatility, here are three companies currently either out of favour with the market, or with big growth prospects. They could see a doubling in value over the next 12 months if conditions turn in their favour.
Billabong International Limited (ASX: BBG)
There is no doubt that Billabong is an ugly duckling. The desperate state of the company and high debt levels has seen the share price on a downward trajectory for the past three years. However, beneath the aimless management and failed takeovers, lies a set of world-class brands waiting to be seized upon.
Billabong is currently undertaking a serious culling of stores and suppliers, as part of its turnaround strategy and took a $536 million write down in the first half of 2013. Excluding the write-down, the group had a first half EBIT of $36.4 million on sales revenue of $699 million. At its current share price of just $0.63, some good news around future prospects could see a jump in the next 12 months.
Silver Lake Resources (ASX: SLR)
Gold miners and producers have suffered huge drops in share price in the last 12 months. The falls were sparked by the sharp decline in gold price and exacerbated by investor panic, taking no chances and dumping companies which looked at risk or had high costs.
Silver Lake was hit harder than most; at its worst losing 86% of its value from an October 2012 high of $3.96 per share. The company has 6.6 million ounces of gold reserves and has grown from revenues of $58 million in 2009 to $135 million last year. If gold prices stabilise or begin to rise again, it's not hard to imagine Silver Lake Resources rising strongly from today's share price of $0.80.
Senex Limited (ASX: SXY)
Senex is a diversified oil explorer and producer focused on the Cooper Basin, with growing production success. It differs from the previous two companies because rather than being beaten down by a stampeding market, Senex appears to hold strong (albeit speculative) growth prospects.
Net proven and oil reserves have grown from 6.4 million barrels of oil equivalent (mmobe) in 2010/11, to a forecast 14.8-16.8 mmobe in 2013/2014, with growing production. Continued success in exploration could push Senex's share price to new heights.
Foolish Takeaway
The three companies certainly come with big risk and have many unknown factors around future performance. However if conditions swing in their favour, the companies could see jumps in share price from where they are today.
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Motley Fool contributor Regan Pearson does not own shares in any companies mentioned in this article.
