Today’s full-year results from Petra Diamonds (LSE: PDL) were somewhat disappointing, although largely expected by the market. Pre-tax profit fell from $124m in the previous year to $85m in the last year due to a weak diamond market and a reliance on mature, diluted mining areas. As such, a slight increase in total production was not enough to offset this, although the company’s share price is up 2% today following the release.
A key reason for the rather upbeat mood of the market is Petra Diamonds’ future potential. It has reaffirmed its production targets all the way until 2019 and, looking ahead, it appears to be much more confident about its future performance. In fact, Petra Diamonds appears to be in a strong position as a result of its lean business model, sound finances and the prospect of accessing new, undiluted areas as Finsch and Cullinan from next year onwards.
Despite this potential, Petra Diamonds continues to offer excellent value for money. For example, with earnings due to rise by 41% next year, Petra Diamonds trades on a rather lowly price to earnings growth (PEG) ratio of just 0.3. This indicates that its shares offer growth at a very reasonable price and could be set to record strong gains.
Similarly, housebuilder Persimmon (LSE: PSN) also offers star performance potential. While interest rate rises are coming, demand for housing is very likely to remain high in the next few years. That’s because even though mortgages may become more expensive, they are likely to remain cheaper than they have historically been, since interest rates are expected to rise only at a very slow rate.
As such, Persimmon’s profitability is likely to continue to improve and, looking ahead to the next two years, its profit is due to rise by 24% and 10% respectively. Both of these growth rates are much higher than those of the wider index, but yet Persimmon still trades on a price to earnings (P/E) ratio of just 12.3. This indicates that its share price could continue to rise following its meteoric gains of 423% in the last five years.
Likewise, Vodafone (LSE: VOD) seems to be well positioned to post upbeat share price growth figures over the medium to long term. It is likely to benefit from the ECB’s stance on stimulating the European economy, with the central bank stating that more quantitative easing is ready to be used should the region require it. This should create confidence across the region and, with Vodafone having vast exposure to it, the telecoms company’s bottom line should start to grow after a number of years of disappointing performance.
Furthermore, with a yield of 5.4%, Vodafone remains a very enticing income stock. With interest rates unlikely to move higher at a rapid rate, such a yield could continue to be in-demand and help to increase demand for, and the price of, the company’s shares.
