Monitise
Shares in Monitise (LSE: MONI) (NASDAQOTH: MONIF.US) have fallen by over 5% today despite there being no significant news flow released by the company. Indeed, it’s been a rather volatile period for investors in the mobile payments solutions provider, with its share price ranging from 26p to 34p in the last month alone.
Of course, uncertainty has surrounded the future of Monitise since major shareholder and customer, Visa, decided to review its stake in the business. However, a deal with IBM that allows Monitise to access a greater potential spread of clients and, with the company seemingly in a high growth industry and forecast to move into profitability (albeit with regard to its EBITDA) in 2016, the medium term could prove to be prosperous for investors in the company.
Certainly, it seems to be operating in an industry that looks set to grow at a rapid rate in future years. The question remains, though, can it ever become hugely profitable? Until that is answered, shares in Monitise are likely to continue to have a wide trading range.
Spirent
Despite being down as much as 8% today, shares in Spirent (LSE: SPT) have closed down just 1%. The reason for their fall is a disappointing third quarter update, with the company stating that demand for its products and services had dipped sharply in the US and China during the period and, perhaps more worryingly, it expects the situation to remain the same in the fourth quarter of the year, too.
In spite of this, acquisitions helped Spirent to post marginal increases in revenue in the third quarter (up from $107.7 million last year to $110.1 million this year), with the company reiterating its guidance for the fourth quarter of the year. It also said it will review its cost structure so as to align costs with the substantial changes that have taken place in the market.
With shares in Spirent trading on a price to earnings (P/E) ratio of 20.7, they appear to be rather richly valued. However, with earnings set to grow by 36% next year, this puts Spirent on a price to earnings growth (PEG) ratio of just 0.6, which means that upside potential could be on offer.
Electrocomponents
Shares in Electrocomponents (LSE: ECM) fell by a whopping 12% today, as the service distributor of electronics and maintenance products released a very mixed update. Notably, trading conditions have deteriorated in Europe and the UK and fell below the company’s expectations, with stronger sterling also hitting top line growth figures.
Indeed, revenue for the half-year declined from £635 million last year to £616 million in the current year. Despite this, pre-tax profits moved up to £55.5 million from £44.6 million owing to a one-off pension credit that masked an adjusted decline in pre-tax profit of around 16%
In addition, Electrocomponents announced that its CEO, Ian Mason, will step down in March 2015.
With shares in the company trading on a P/E ratio of 13.9 and being forecast to grow earnings by 10% next year, they seem to offer good value for money. As such, they could deliver profitable growth over the medium term.
While shares in Monitise, Spirent and Electrocomponents have fallen today, that doesn’t, of course, mean that they aren’t worth investing in. Indeed, share price volatility can present opportunities for savvy investors.