With the ASX still down a fair way from its recent highs, big-name stocks understandably aren't making headlines with their dramatic rises. One conspicuous exception is Harvey Norman Holdings Limited (ASX: HVN) which has continued its stellar run to hit a new high of $4.82 today.
Most of the strong performers have been small-caps, and one of last week's alumni showed up again with another cracking performance this week:
Bellamy's Australia Ltd (ASX: BAL) – last traded at $4.16, up 198% for the year
Baby food developer Bellamy's has risen another 10% since its highs last week after management released updated (and upgraded) profit guidance. Bellamy's new full year profit could come in between $7.6 and 8.3 million, higher than the ~$6.4 million expected by the market.
This week's rise looks to be a result of investors revising their expectations upwards, and continuing to buy in this week. Bellamy's growth does look compelling, but I am always cautious about buying into such strong demand for shares.
Nevertheless, as full year guidance is confirmed and management releases the forecast for 2016, I believe shares could climb even higher.
Lifehealthcare Group Ltd (ASX: LHC) – last traded at $3.62, up 55% for the year
Medical device supplier Lifehealthcare Group has continued to rise since the company's acquisition of M4 healthcare a few weeks ago. While I wrote that the acquisition was unlikely to affect profits for this financial year, it should lead to a meaningful increase in earnings next year – in addition to the growth expected from its existing business.
Investment bank UBS put a price target of $3.70 on the stock, which I think is likely to be realised sooner rather than later. An interview with a fund manager published in Fairfax media also saw one individual list the share as a favoured stock and claim:
'It could go to $4 and not be expensive.'
Lifehealthcare does look like a solid growth opportunity but investors should form their own opinion on the right price to pay before buying. My opinion is that the stock is fairly fully valued, but could definitely climb higher as full year results and forecasts for 2016 come out.
Senetas Corporation Limited (ASX: SEN) – last traded at $0.135, up 331% for the year
With a market cap of $134 million, Senetas Corporation is a data encryption company that has slid under the radar of most investors until recently. The catalyst for its rise was an announcement back in January that expected profit would double from $1.3 million to $2.5-$2.8 million.
This is nearly 10x the profit that Senetas made in 2013, and the most recent half-yearly report indicates profit is expected to rise further this year. On Friday the company announced that it had won its first contract to develop a customised encryptor for an international customer.
Given that this contract is expected to generate significant additional sales, Senetas shares could potentially rise much further from today's highs.
