Blinkx
Shares in Blinkx (LSE: BLNX) have fallen by an incredible 77% in the last year, as the company has endured a challenging period that has seen a healthy, growing profit turned into what is expected to be a loss in the current financial year. As such, investor sentiment has weakened and its share price has plummeted.
Of course, it’s very difficult to ‘catch a falling knife’ in terms of knowing when to buy a stock that is in freefall, as Blinkx has been. However, bulls will argue that Blinkx’s share price has risen by 9% in 2015 and that it has turned a corner with its new strategy to focus on mobile rather than desktop for its revenues.
This, though, could be missing the point somewhat, since a key attribute for any company is an economic moat, whether that is in the form of a lower cost base, a unique product or brand loyalty. In Blinkx’s case, though, it appears to be behind the curve in terms of adapting to sudden shifts in the industry. Therefore, although it could have a bright long-term future, it may need to successfully transition and develop a niche so that it can then respond in tandem with the changing tastes of customers, rather than reacting suddenly, as it has done in recent months.
As a result, now does not appear to be the right time to invest in Blinkx, although further acquisitions could prove to be game changers for the company and, as such, it is worth keeping an eye on.
LGO Energy
LGO Energy (LSE: LGO) is something of an opposite to Blinkx, in terms of it having delivered excellent gains over the last year, but being weaker in recent weeks. In fact, its shares are down 23% year-to-date despite a successful placing and the reaching of its long term target of 2,000 bopd from its operations in Trinidad.
Of course, profit taking and concerns regarding the oil price could be the reasons for the fall in LGO’s share price, with investors now seemingly being of the view that oil at $50 is here to stay for the medium term. And, looking ahead, these two factors could cause LGO’s share price to come under more pressure over the short term.
Clearly, LGO has a bright long-term future, with its Goudron field seemingly surpassing market expectations and it having the financial firepower to deliver on the required investment to further develop it in future. However, the fact that its shares have risen by 216% in the last year alone when combined with a lower oil price, could cause investor sentiment to wobble in the meantime. As such, now may not be the right time to buy a slice of LGO, although further share price falls could begin to make it look a lot more attractive for long term investors.