Just as looking at the biggest fallers over the past 12 months can sometimes be productive, looking at the biggest gainers can also generate useful investment ideas. After all, it's not what has happened which is most important, it's what happens next. Here's my take on these 3 big winners:
Cleanaway Waste Management Ltd (ASX: CWY) – up 62%
Cleanaway operates waste management (collection and landfill) services for all types of commercial, industrial, and municipal waste. Its shares have soared after a strong half year that saw profits lift 24%, primarily due to lower costs. Management has several initiatives in place to improve costs further, although they also stated that the market remains competitive.
At an estimated ~30 times full year profits and with no free cash flow, Cleanaway looks expensive to me today.
Origin Energy Ltd (ASX: ORG) – up 67%
Origin shares have soared following the company's reduced debt burden and subsequent announcement that it would be spinning off its oil and gas assets in an Initial Public Offer, which is expected to both realise value for shareholders and reduce the company's debt burden further.
I'm not overly keen on Origin's retail electricity and gas business and would prefer to buy the gas assets, but a post-IPO a less burdened Origin could be worth a closer look.
Monadelphous Group Limited (ASX: MND) – up 90%
Just one of many mining services companies that have soared during the past year's resources recovery, Monadelphous shares leapt higher following the possibility of a new multi-year contract with Oil Search in Papua New Guinea. Despite a weak half-year report that saw profits plunge yet again, Monadelphous has reported wins on a number of new contracts over the past year and earnings could be finally set to improve in the 2018 financial year.
I'm not a buyer of Monadelphous shares, but the current price of 21 times estimated full year earnings could prove cheap if the company is set to have a much bigger year in 2018.
