Shares in ARM (LSE: ARM) have disappointed in the last three months, with them falling by over 8%. A reason for this is weakening investor sentiment towards China as its GDP growth rate continues to slide and it endures a soft landing. While it’s understandable why investor sentiment in China-focused stocks has fallen in the short run, in the long run there’s huge opportunity for those same companies to profit from China’s transition towards a consumer-focused economy.

For example, smartphone sales could rise as an increasing number of Chinese see their incomes increase over the coming years. With ARM designing and developing smartphone chips, this could provide a boost to its bottom line. However, ARM is likely to deliver impressive growth even if this doesn’t happen, since its business model is highly innovative and nimble, which allows it to focus on leading the next wave of technological advances.

This focus on intellectual property rather than on manufacturing allows ARM to retain a relatively asset-light balance sheet, which contributes to impressive return figures. And even though it’s becoming a more mature company, ARM is still set to grow its bottom line by 43% in the current year. This puts it on a price-to-earnings growth (PEG) ratio of 0.7, which indicates that it offers FTSE 100-beating prospects.

Talk(talk) is cheap…

Also offering significant upside is Talktalk (LSE: TALK). Its recent past has been hugely challenging, with its reputation among customers and investors being hurt by last year’s hacking scandal, which is likely to have increased customer losses and also dissuaded many potential customers from signing up with Talktalk. As a result, the company’s share price has fallen by 29% in the last year.

Looking ahead, there’s certainly light at the end of the tunnel for Talktalk. While its sales performance is set to suffer in the near term, the quad play space is a fast growing area and the company is well-placed to benefit. Certainly, competition is increasing, with other telecoms operators muscling in on broadband and pay-TV, but Talktalk is still set to deliver double-digit growth in the current year and this could push its share price significantly higher.

And with the memories of the hacking scandal likely to recede over the coming years, Talktalk’s sales figures could surprise on the upside and help to improve investor sentiment yet further.

Future star?

Also offering FTSE 100-beating potential is Spirent (LSE: SPT). Although the connected solutions company has already recorded a rise in its share price of 25% this year, it remains good value based on its upbeat earnings growth forecasts. For example, its bottom line is expected to rise by 13% in the current year and by a further 17% next year. When combined with a price-to-earnings (P/E) ratio of 22, this equates to a PEG ratio of only 1.5, which indicates that further share price growth is on the cards.

Certainly, Spirent’s track record of growth is rather volatile, with it having posted sizeable falls in earnings in two of the last five years. However, investor sentiment seems to be on the up and if the company is able to meet its guidance then it could prove to be a star performer.

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Peter Stephens owns shares of ARM Holdings and TalkTalk Telecom Group plc. The Motley Fool UK has recommended ARM Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.