Shares in short haul airline Flybe Group (LSE: FLYB) have fallen by 46% so far this year, but the company isn’t in financial difficulties. Indeed, the group’s recent results confirmed that the airline is delivering on its three-year turnaround plan and has returned to profit.

One problem is that Flybe has been a serial disappointer. The group’s turnaround has taken longer than expected, but real progress was made last year. Sales rose by 8.7%. Solutions were found for all of the firm’s surplus airplanes. Net cash also remains strong at £62m, or 28p per share.

Analysts’ current forecasts put Flybe shares on a forecast P/E of 5.6 for the current year. If Flybe can deliver on these forecasts, I believe the shares should rise sharply from current levels.

Troubled retailer with promise?

Mothercare (LSE: MTC) has slumped by 36% so far in 2016, thanks to a recent profit warning that revealed a 10.8% fall in international sales during the final quarter of last year.

The group’s international business has been hit by reduced consumer spending in the Middle East and China. But analysts expect adjusted earnings to rise by 5% to 9.9p per share this year. This gives Mothercare a forecast P/E of 14, with an attractive PEG ratio of 0.4.

These figures seem reasonable to me. Mothercare’s balance sheet has net cash and UK like-for-like sales returned to growth last year. Further downgrades are possible, but if you believe Mothercare’s brand will remain popular, now could be a good time to pick up a few shares.

Potential to double?

Property services firm Lakehouse (LSE: LAKE) floated on the London market in March 2015. Since then, the shares have fallen by 69%, thanks to a combination of profit warnings and management in-fighting.

So why might you want to invest in this firm? Well, the dust has now settled on Lakehouse’s profit warnings and the group has a new finance director and chairman. The company’s house broker, who we can assume has been briefed by the new board, has issued earnings guidance for the current year of 7.9p per share.

That puts Lakehouse stock on a forecast P/E of just 3.6. The firm is also expected to pay a 3p dividend, giving a potential yield of 10%. These figures are quite extreme and indicate a real risk Lakehouse won’t deliver.

But small caps are often under-researched by the market and mispricing can happen. Lakehouse’s recent interim results suggest that the forecast figures could be realistic, if the group has a strong second half.

If Lakehouse comes close to delivering on its forecast figures, I’d expect the shares to double.

Neil Woodford is backing this stock

The share price of online hostel-booking service Hostelworld Group (LSE: HSW) has fallen by 45% over the last month. The group warned in May that trading over the second quarter had been “below our expectations”. Bookings are expected to be “marginally down compared to last year”.

However, at least one top fund manager appears unconcerned by this blip. Neil Woodford’s funds own 22% of Hostelworld. Mr Woodford purchased additional shares after the recent drop.

The group’s figures look promising too. The shares trade on 10 times 2016 forecast earnings, and Hostelworld appears to generate a decent amount of free cash flow.

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Roland Head 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.