Shares in Imagination Tech (LSE: IMG) have fallen by as much as 9% today after a broker downgrade caused sentiment to weaken significantly. The downgrade, from Numis, has flagged up concerns surrounding the future earnings growth potential at the multimedia and communications technology group.
Indeed, Imagination Tech’s bottom line has been hugely volatile in recent years, with it falling in the last two years having performed relatively well during the earlier part of the economic slowdown.
Of course, while a reduction in growth forecasts is disappointing, Imagination Tech could still deliver profit growth that is above and beyond that of the wider index. With 2016 set to be a strong year for the company, its PEG ratio of 0.7 still seems to offer growth at a reasonable price.
Sentiment in Quindell (LSE: QPP) has been hit this week by the news that its Non-Executive Vice-Chairman, Tony Bowers, has died. Indeed, shares are down 6% today and, with market sentiment being extremely uncertain even before the sad news, Quindell could see its share price move further south in the short run.
Of course, recent strong results have done little to convince the market that Quindell’s earnings are high quality. Until this apparent mismatch between profit and cash flow can be proved otherwise, sentiment in Quindell could remain at a relatively low ebb.
As a result, it could be worth waiting for a succession of results that show the fears of investors are unfounded. After all, patience has never lost any investor any money and, although Quindell’s share price has already fallen heavily in recent months, there could be further falls to come in the meantime.
Life as a gold mining company has been tough in recent months. Indeed, the share price of Randgold Resources (LSE: RRS) (NASDAQ: GOLD.US) provides evidence of this, with it falling by 26% in the last quarter alone, which includes a fall of 6% today.
Despite weak sentiment, which has been a key reason behind its share price fall, Randgold Resources still has considerable potential. For example, the sub-Saharan focused entity is expected to increase its bottom line by 19% next year. This is roughly twice the rate of growth of the wider index and, with shares in Randgold Resources trading on a price to earnings (P/E) ratio of 21, it equates to a price to earnings growth (PEG) ratio of 1.1.
This seems to represent growth at a reasonable price and, although the gold price could weaken now that we are at the end of the Fed’s stimulus programme, Randgold Resources seems to be well-placed to deliver an improved share price performance over the medium term.
Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Imagination Technologies. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.