Online fashion retailer ASOS (LSE: ASC) has given investors a rocky ride, after the unfeasible growth expectations implied by its 2014 peak share price of more then £70 came tumbling down. Today the shares change hands for a little under £30 apiece, but even that represents a 142% gain since the end of 2011 while the FTSE 100 has managed just 14% in the same period.
ASOS has suffered from the global slowdown, from unfavourable global pricing, and from supply problems, but at the interim stage we heard that a record Christmas had helped — but we still saw a 14% rise in revenues translating to a 10% drop in pre-tax profit. Still, the third quarter brought a 20% rise in sales, and the full year is forecast to see only a modest EPS fall of 2%.
The results are due on Tuesday, 20 October, but on a P/E of 69 based on current forecasts, ASOS shares are still too expensive for me.
On the same day we’re due first-half results from Quantum Pharma (LSE: QP), which only floated on AIM in December 2014 but which as already given its shareholders a hair-raising ride. By mid-June the price had soared by 76% to 174p, but since then we’ve seen a 27% fall back to 125p — the overall gain so far stands at 28%.
Quantum describes itself as “the UK’s leading manufacturer and supplier of unlicensed medicines and hard-to-source products“, and supplies wholesalers, pharmacy chains, hospitals etc. EPS is expected to fall 24% this year, but a 56% rebound forecast for the year to January 2017 would put the shares on a P/E of only 11, so we could be looking at a nice growth possibility here.
Speaking of growth stocks, ARM Holdings (LSE: ARM) will be bringing us a Q3 update on Wednesday, 21 October, in a year that’s seen a fluctuating share price. It climbed to a peak of 1,233p in March, before falling back to today’s 972p price, despite forecast earnings growth of nearly 70% for the year to December and despite the company’s ongoing share buyback programme.
The shares are on a forward P/E of 32 this year, dropping to 28 next. And while that’s high compared to the FTSE’s average of around 14, it’s the lowest we’ve seen for ARM for some years. Does that make the shares a bargain now? Well, with growth in demand for ARM’s mobile computing chips continuing year on year, I see the shares as undervalued at today’s price.
Wednesday will also bring a first-quarter update from satellite telly firm SKY (LSE: SKY), and we should hopefully see early indications of a return to earnings growth this year — the past two years have brought small declines in adjusted EPS, but the City is expecting a 12% gain by June 2016. And the dividend has kept on growing, by 3% last year, which is nicely ahead of inflation.
Investors seem optimistic, with the current 1,071p share price bringing a 26% gain in the past 12 months, and it looks like there’s going to be an additional 3.3% to add to that from those dividends.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended ARM Holdings and Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.