Does anyone remember the Chinese market crash and 'Grexit' panic from a few months ago?
Despite the S&P/ASX 200 index being a long way from its yearly high, a huge number of stocks have gone on to set new price records this week.
All that glitters is not gold however, as buyers of the following companies at today's prices might discover:
Speedcast International Ltd (ASX: SDA) – last traded at $4.88, up 157% for the year
Speedcast has shot into the stratosphere as anticipation mounts about the company's full year results, after a number of major acquisitions from this satellite internet provider.
In fact, Speedcast has become so large that it is now eligible for entrance into the ASX 200 index, meaning further price rises could be on the way as fund managers buy in.
Despite that I do not believe that Speedcast offers value at today's price – the $560m company only made $2.7 million in profit at its most recent half year report.
Bellamy's Australia Ltd (ASX: BAL) – last traded at $8.53, up 499% for the year
Is there any stopping Bellamy's? This baby food provider has quintupled its value in the past twelve months, and there is likely more to come as the business ramps up its operations in China.
Bellamy's is scrambling to increase its output to meet demand for its product, and in fact management reports that a significant portion of product sold in Australia is being resold online to China at substantially higher prices.
This is a good problem to have and I suspect the company has big things ahead of it. However, like Speedcast, I find it difficult to see value in an $800 million business that only made $9 million in profit over the past twelve months.
Magellan Financial Group Ltd (ASX: MFG) – last traded at $21.98, up 64% for the year
Last but not least, Magellan Financial Group earns its spot this week after shares rose in the wake of the company's most recent annual report. With revenue up 92% and profit up 108%, is it any wonder investors have piled into Magellan shares?
Magellan managed to achieve a virtual doubling of business size despite a modest increase in staff employed, and three of its investment options – the Global Fund, Infrastructure Fund, and High Conviction fund – smashed the market after fees. Management's long-term focus and tight cost discipline is a plus.
Although the stock is not cheap on conventional metrics – with a Price to Earnings (P/E) ratio of 21 and trading on over 10 times the value of its Net Tangible Assets – I believe Magellan Financial Group could be a reasonable purchase for long-term investors at today's prices.
