Shares in Watchstone (LSE: WTG) were given a boost today, with the company confirming that it has made further asset disposals. Its Brand Extension subsidiary has agreed a deal to offload BE Insulated and Carbon Reduction Co to the BE Smart Group for £1. The sale will reduce Watchstone’s costs by up to £2m per year, with the assets having been loss-making and underperforming.

The sale is in-line with Watchstone’s strategy of simplifying its business model as it seeks to turn its fortunes around following a challenging period under its previous name, Quindell. While today’s asset disposals will cause a loss on the sales of £4.2m, they should help to streamline the company’s operations as it seeks to become a technology-focused holding company over the medium to long term.

Looking ahead, Watchstone is expected to remain in the red during the next two financial years. For example, its pretax loss is forecast to be £31m this year and then is due to narrow to £16m next year. While this would be an improvement and Watchstone is making progress in turning its business around, it may be prudent to wait for further developments regarding the delivery of a black bottom line before buying a slice of the business.

Similarly, online advertising company Blinkx (LSE: BLNX) is also expected to remain in the red during the next two years. It is enduring a very challenging period, with its restructuring taking longer than previously expected and causing investor sentiment to remain relatively weak. In fact, Blinkx’s share price has fallen by 38% in the last three months alone.

Despite this, Blinkx is making progress as it bids to return to profitability. For example, it has forged relationships with a number of key demand partners, as well as increasing its core revenues by 37% in the first half of the current year. It is also in the process of exiting non-core business areas and has combined a number of key divisions under the Rhythm One banner.

However, with Blinkx reporting a widened loss even after adjusting for exceptional restructuring costs in its half year results, it appears to be a stock to watch, rather than buy, at the present time. While a merger with a sector peer may be in the pipeline, a number of other stocks appear to offer better risk/reward ratios than Blinkx right now.

One such example is GKN (LSE: GKN), with the aerospace and automotive company trading on a price to earnings (P/E) ratio of just 10.6. Certainly, its near-term growth prospects are somewhat lacklustre, with GKN being forecast to post a rise in earnings of just 3% this year, but its long term potential remains highly appealing.

That’s because the automotive sector is likely to deliver excellent growth in the coming years as demand for cars from the emerging world increases. Certainly, the industry is viewed as rather unappealing by many investors at the present time due to doubts surrounding Chinese economic growth, but with rising incomes in China, India and the wider developing world, demand for automotive parts is due to rise.

Similarly, improved economic growth in the developed world should allow military spending to pick up. Austerity appears to be holding back GKN’s aerospace division and, with the US economy returning to full health, global defence spend could begin to creep upwards. This plus a robust civil aerospace performance, mean that GKN’s future as an investment seems to be highly encouraging.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of GKN. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.