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3 Small-Caps Set To Post Stellar Returns: Blinkx Plc, LGO Energy PLC And Wincanton plc

Blinkx

The old saying ‘cash is king’ is certainly relevant in the case of Blinkx (LSE: BLNX). That’s because, while the company finds itself in a hugely challenging position at the present time, its lack of debt and considerable pile of cash mean that it not only has the financial firepower to turn its fortunes around, but also the time to put its plans into action. And, that’s a key reason why its share price has risen by 9% since the turn of the year.

Certainly, the next couple of years are unlikely to see Blinkx offer anything more than future potential, with it being expected to lack profitability until 2017 at the earliest. However, for long term investors now could be a great time to buy, with more acquisitions, a refined product offering, and a more nimble business model having the potential to push Blinkx’s share price higher.

LGO Energy

Even though the oil price has collapsed since the middle of last year, LGO Energy (LSE: LGO) is still up by 290% in the last year. Clearly, a key reason for this has been continued upbeat news flow regarding its prospects in Trinidad, where the company is continuing to invest in its long-term capabilities via a recent round of financing. This is good news for investors, since it shows that LGO Energy has sufficient cash for its development plans, and this should help to stabilise investor sentiment in the company moving forward.

Clearly, LGO is a high-risk play and further falls in the oil price could hurt its performance. In addition, setbacks regarding the Goudron field in Trinidad must be expected but, for long term investors who can live with relatively high volatility, it could be a strong buy at the present time.

Wincanton

The solid outlook for the UK economy means that shares in logistics company Wincanton (LSE: WIN) are set to rise moving forward. And, with investor sentiment on the up (they have risen by 34% in the last year), now could be a great time to buy a slice of the business.

A key reason for Wincanton’s appeal right now is the great value it offers. For example, it trades on a price to earnings (P/E) ratio of just 8.2, and yet is expected to increase its bottom line by 7% this year and by 8% next year. As such, its current valuation is difficult to justify – especially when the company just last week announced that trading for the current year is in-line with expectations.

And, while margins are coming under pressure in its Pullman Fleet Service division, the current share price offers a wide margin of safety so that even if Wincanton does disappoint somewhat, its shares could still offer significant upside over the medium to long term.

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Peter Stephens 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.