2016 has been a rather disappointing year for investors in CVS Group (LSE: CVSG). That’s because the veterinary services provider has recorded a fall in its share price of 7% since the turn of the year. However, with its shares still being up by 24% in the last 12 months, recent performance could prove to be something of a blip due to wider market weakness and/or profit-taking.
Looking ahead, CVS is forecast to increase its bottom line by 27% this year and by a further 17% next year. This rate of growth, while strong, is not particularly unusual for CVS since it has recorded an annualised rate of earnings growth of just under 16% during the last five years. And with its shares trading on a price-to-earnings growth (PEG) ratio of only 1.3, they seem to offer upbeat growth numbers at a very appealing price. As such, CVS seems to be set to reverse its recent share price fall and remains a high quality smaller company for the long term.
Head in the clouds
Also recording a falling share price since the turn of the year is cloud computing and managed hosting specialist Iomart (LSE: IOM). Like CVS, however, Iomart’s share price has surged in recent years and despite falling by 2% since the start of the year it’s still up by 211% in the last five years.
Looking ahead, such a staggering rate of growth could be replicated since Iomart remains a high quality business with a very bright future. This is evidenced by the company’s earnings growth outlook, with Iomart expected to increase its bottom line by 23% in the current financial year and by a further 9% next year. This indicates that investor sentiment could pick up – especially when Iomart has a PEG ratio of just 1.6. Therefore, with Iomart continuing to produce an above average growth rate, it seems to be a worthwhile purchase at the present time.
While CVS and Iomart have fallen this year, shares in Sirius Minerals (LSE: SXX) have soared by 22%. This is somewhat surprising since 2015 was a fantastic year for the company and investor interest was exceptionally high as planning approval was granted for a major potash mine in Yorkshire. And after rising by 41% in 2015, it would have been unsurprising for Sirius Minerals’ shares to have come under a degree of pressure due to profit-taking.
However, investors seem to be even more excited about the company’s prospects now, even though the cost of the project is vast. While funding such a huge project may prove to be challenging – especially with investor sentiment towards the resources sector being somewhat lukewarm, Sirius Minerals has the potential to post high levels of profit in the long run. However, with a number of other resources sector companies offering rising profitability and a low share price, there seem to be better options on offer elsewhere.