Since listing in March 2014, online fashion retailer Boohoo.Com (LSE: BOO) has been a huge disappointment. Its shares have posted a fall of 56% since then and, while they have risen by 14% in the last month, they are still some way off their IPO price.
This, though, should be viewed as an opportunity to buy a slice of a great business, rather than view Boohoo.Com as a failure. Certainly, investor sentiment may be weak, but Boohoo.Com’s financial performance is expected to be very impressive in future.
For example, it is forecast to post a rise in earnings of 42% in the current year, followed by a further increase of 25% next year. Such strong growth numbers have the potential to positively catalyse the market’s view of the company, which is performing well and has the scope to continue expanding outside of the UK. And, with its shares trading on a price to earnings (P/E) ratio of 31.3, Boohoo.Com has a price to earnings growth (PEG) ratio of just 1, which indicates that its shares could continue to close the gap to their IPO price over the medium term.
Similarly, mobile apps specialist Globo (LSE: GBO) also has huge potential. It focuses on creating efficiencies for companies using mobile devices and, in the last five years, has increased profit at an annualised rate of 36%. Furthermore, Globo has increased its bottom line in each one of those years, indicating that it is a very consistent performer.
Looking ahead, Globo is forecast to continue its strong performance by posting a rise in net profit of 21% in the current year, followed by further growth of 17% next year. And, with its share price having fallen by 20% since the turn of the year, Globo has a PEG ratio of only 0.2. This indicates that it has a very wide margin of safety, thereby moving the risk/reward ratio further in the investor’s favour.
In addition, with Globo having only a modest amount of debt on its balance sheet (its debt to equity ratio stands at just 24%), it seems to be sensibly financed and all set to post stunning share price gains over the long term.
Meanwhile, mobile payments solutions specialist Monitise (LSE: MONI) continues to struggle. Its recent results were disappointing, with revenue falling and the company reducing its guidance for the next financial year. Furthermore, the company’s CEO announced her decision to leave for personal reasons and, as a result, things seem to be going from bad to worse for the business. And, with its share price falling from 80p at the start of 2014 to less than 3p, investors seem to have lost patience with the company.
That’s disappointing, since Monitise undoubtedly has a great product and has been able to sign-up major blue-chip clients. Furthermore, the mobile payments business has huge growth potential. The problem, though, is a lack of profitability and, until Monitise can turn its bottom line into a black one, it seems prudent for investors to watch, rather than buy, a slice of the business.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.