The performance of Blinkx (LSE: BLNX), ASOS (LSE: ASC) and Dart (LSE: DTG) has differed hugely since the turn of the year. In the case of online advertising specialist, Blinkx, its shares have continued to disappoint, with them falling by 8% year-to-date, although investor sentiment has been much, much stronger than in 2014, when they fell by a whopping 87%.
Still, investor sentiment is somewhat weak and, while the company endures a major transitional period, it is difficult to see from where a positive catalyst will emerge. For example, its recent second quarter results were somewhat disappointing and showed that the company is likely to be a turnaround play for a prolonged period. This is confirmed by Blink’s forecasts, which highlight that pretax losses are expected in each of the next two years, thereby providing investors in the company with little to cheer about.
Certainly, Blinkx appears to be doing all of the right things. It is using its substantial cash balance to make acquisitions so as to quicken the pace of progress, while it is also reorganising its marketing strategy, which should simplify its product offering. And, with the shift to mobile likely to mean greater potential revenue growth and, eventually, profitability, Blinkx seems to be worth buying at the present time for the long haul, but appears unlikely to become a ten-bagger at this stage.
ASOS
Online fashion retailer, ASOS, made an excellent start to the year and rode a wave of investor enthusiasm which pushed its share price up by 60% by April. Since then, though, it has fallen back to the same level at which it started the year, which means that new investors in the company are likely to be sitting on hefty paper losses.
Looking ahead, ASOS is expected to turn around its disappointing performance of recent years – but not until 2016. In the current year, its bottom line is set to fall by 2%, which means that three years of falling profitability will be recorded (if forecasts are accurate).
As such, ASOS will need to increase earnings per share by 2.3 times just to reach the same level as in 2012. And, while a reduction in investment in pricing in its international operations is likely to mean higher margins, there is a risk that sales growth may stutter if customers are unwilling to pay higher prices. Furthermore, ASOS may be a stock with excellent long term growth potential but, with a price to earnings (P/E) ratio of 60, it shares could come under further pressure in the months ahead.
Dart
Meanwhile, travel company, Dart, has been by the far the best performer of the three stocks. Its shares are up by 67% since the start of the year and this means that in the last five years they have risen by a superb 570%.
Looking ahead, further share price growth is very much on the cards. That’s because Dart is expected to post a rise in earnings of 15% in the current year, and this puts it on a price to earnings growth (PEG) ratio of just 0.9. This is somewhat surprising, given its excellent share price performance, but with trading conditions for travel companies being very positive (and likely to remain so in the short to medium term), Dart looks set to continue to outperform the majority of listed companies moving forward.
In addition, Dart remains a company with huge income potential. It may only yield 0.7% at the moment, but with a payout ratio of only 10%, dividends could move higher at a rapid rate. And, while a share price rise of 10x may not be realistic, Dart certainly has the scope to record superb capital gains, making it the clear pick of the three stocks discussed here.