Any time a high-quality stock with a strong long-term performance falls out-of-favour with the market and experiences a significant decline in share price it can be worth undertaking a closer inspection.
While more often than not it is likely that the market has accurately appraised new information or a change in circumstances for a company, occasionally the market over-reacts and the share price moves to a level where the price being asked in comparison to the value being received becomes appealing.
Up until July 2014 university pathways education provider Navitas Limited (ASX: NVT) had provided an impressive 241% share price gain to shareholders over the preceding six-and-a-half years. The stock was, not surprisingly, trading on a hefty multiple.
Since July 2014 however Navitas' shares have fallen 34%, resulting in a dramatic underperformance compared with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Last week Navitas announced that its Northern Hemisphere University Programs Colleges (which cover the UK, USA and Canada) had increased enrolments by 9%.
The highlight from this announcement was the strong growth numbers from North America where Canada managed to grow its student numbers by an impressive 16%; meanwhile the company's US operations achieved a solid 15% growth, thanks in-part to the opening of Navitas' sixth US College at Florida's Atlantic University.
These impressive growth rates were dampened by a flat UK result which reported growth of just 1% due to the ongoing issues from that country's visa rules.
Investors were told that they should expect to hear from the company in late March with details of how the all-important Southern Hemisphere enrolments are tracking. With strong results from the Northern region, now could be a good time for investors to have Navitas on their watchlist. If the company reports solid enrolments in the Southern region later this month it could be a sign that it remains on a solid growth path which would a justify forward price-to-earnings ratio of 18.5x.
