Having risen by 25% in just ten weeks, Blinkx (LSE: BLNX) is benefiting from a significant shift in investor sentiment. Certainly, it has a long way to go with its turnaround plan, and it is likely to take longer than the market currently expects as it undergoes a substantial shift in where its revenue is sourced from.
However, the early signs appear to be encouraging, with Blinkx having the potential to deliver very positive share price growth over the medium to long term.
In fact, Blinkx is expected to return to profitability in 2017 and, as this date gets closer, it would be of little surprise for investor sentiment to improve significantly. Certainly, its earnings visibility remains poor, since Blinkx is likely to be a very different business by 2017 than it is today. But, with an excellent balance sheet and the time to put in place its long-term strategy, it could be a winning stock in the long run and is capable of doubling in the years ahead.
Although 2014 saw Spirent (LSE: SPT) increase net profit by just 2%, the next two years are set to be far more impressive. That’s because the communications company is expected to increase its bottom line by 22% in the current year, followed by 19% next year. This means that in 2016 its profit could be 45% higher than in 2014, with this upturn likely to cause investor sentiment (and its share price) to move higher.
Of course, some of this growth potential may already be priced in, with Spirent’s shares having risen by 16% year-to-date. However, it still offers excellent value for money, with its price to earnings growth (PEG) ratio being just 0.8. As such, and if Spirent can maintain its forecast growth rate, it could be an excellent long term performer that could realistically double in a bull market.
The last two years have been disappointing for Imagination Tech (LSE: IMG), with it posting falls in net profit of 7% and 14% respectively. And, looking at the current year, things are expected to get worse, with a fall in the company’s bottom line of 20%.
Despite this, Imagination Tech’s share price has soared by 47% in the last year, as investors look ahead to much more profitable times for the business. In fact, Imagination Tech is forecast to increase earnings by 32% next year, and by 14% the year after. This means that its profit could be 50% higher within just over two years and, as such, its share price could continue to move upwards.
Furthermore, with Imagination Tech having a PEG ratio of just 0.9, a doubling of its share price could be on the cards in the long run.
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.