Despite the S&P/ASX 200 (INDEXASX: XJO) hitting a new 7-month low today, there are plenty of stocks enjoying strong upwards momentum – usually on the back of strong results.
Surprisingly enough, two out of three companies in today's article didn't soar on their results, but rather reflect growing investor hopes in their future. At least one of them also looks to be overpriced:
AGL Energy Ltd (ASX: AGL) – last traded at $16.90, up 20% for the year
Energy provider AGL has lifted 3% since a reasonable annual report revealed a 2% rise in revenue and a 12.1% increase in underlying profit on Wednesday. The company has come a long way since the Macquarie Generation acquisition earlier in the year – which performed significantly better than expected.
With MacGen expected to continue its performance into 2016, its first full year of operation, AGL appears reasonably placed for the future especially as cash flow is increasing and gearing is decreasing.
However, with the domestic power market remaining competitive and electricity volumes still falling, I think AGL could have a mediocre year ahead of it and I believe shares have gone roughly as high as they will go in the absence of any further news.
1-Page Ltd (ASX: 1PG) – last traded at $3.41, up 1,033% for the year
Up 731% since October 2014 when fool.com.au wrote about it, 1-Page has enjoyed a rapid rise as investors pile in to the positive announcements from the company so far.
With more companies continuing to sign up, 1-Page certainly seems likely to be successful although it is currently unprofitable and the question of what to pay for shares remains a tricky one.
A sobering fact – 1-Page's market value is roughly 1,000x the amount of sales the company is currently earning. While that is expected to increase rapidly in the future it will have to grow a lot before the company appears like a discount buy at today's prices.
However, I also expect that 1-Page will rise further in the near future as investors buy in advance of the company's upcoming half-year report.
Nextdc Ltd (ASX: NXT) – last traded at $2.66, up 67% for the year
Data storage centre owner Nextdc has been another strong performer in recent times as the company builds on its positive half-year results earlier this year.
Recent long-term contracts with the Federal Government and a confidential 'Leading Corporation' are a positive for Nextdc's bottom line and allow the company to leverage its fixed cost base to grow earnings.
Nextdc is as yet unprofitable – though this situation is improving – and I believe that it looks fairly expensive despite recent contract wins. When it does make a profit it will still trade on quite a high Price to Earnings (P/E) ratio and there are other stocks that are profitable and growing that I would prefer to buy first.
