Today’s trading update from Cape (LSE: CIU) shows that its operating environment remains tough. On the one hand, order intake was solid and the company’s order book is marginally higher than it was at the same time last year. Furthermore, Cape has benefitted from favourable foreign exchange rate movements and a faster than expected ramp-up on the Wheatstone project in Australia. However, with Cape’s margins coming under greater pressure than expected, its operating profit was lower than anticipated.

Looking ahead, Cape is expected to record a fall in its bottom line of 19% this year. This clearly has the potential to hurt investor sentiment in the short run, but with Cape’s net profit expected to flat line next year, investor sentiment may improve over the medium term. That’s especially the case since Cape’s current valuation indicates that it offers significant upward rerating potential, with it having a price to earnings (P/E) ratio of just 8.8. As such, far from being about to crash to zero, Cape could be a highly profitable investment in the long run.

Similarly, Antofagasta (LSE: ANTO) appears to have stunning long term potential. The copper, gold and molybdenum miner has pursued a sound strategy of becoming increasingly efficient through asset disposals and cost cutting, with it being in a relatively strong financial position through which to deal with the low ebb in commodity prices.

Certainly, Antofagasta’s bottom line is being hurt by the collapse in commodity prices, with its earnings having fallen in each of the last three years. However, looking ahead to the current financial year and beyond shows that it could be on the cusp of a successful turnaround.

For example, Antofagasta is expected to post a rise in its pretax profit of 40% in the current year, followed by a further gain of around 70% in earnings next year. This puts it on a price to earnings growth (PEG) ratio of just 0.8, which indicates that now could be a good time to buy a slice of the business while it has a relatively wide margin of safety.

Meanwhile, Gulf Keystone Petroleum (LSE: GKP) continues to endure a highly challenging period. Having fallen in value by 77% in 2015, its shares have declined by a further 72% since the turn of the year and have shown little evidence of mounting a successful comeback.

Clearly, a rising oil price could cause investor sentiment towards Gulf Keystone and the wider oil sector to improve. However, with Gulf Keystone being a relatively risky play due to its location and financial outlook, there seem to be more appealing risk/reward ratios on offer elsewhere within the oil and gas industry. Certainly, Gulf Keystone could turn its poor share price performance around, but at the present time its risks appear to outweigh its potential rewards.

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