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3 small-cap high flyers? Boohoo.Com plc, AFC Energy plc and Blinkx plc

Shares in online fashion retailer Boohoo (LSE: BOO) have soared by 30% since the start of the year. A key reason for this is the company’s upbeat future prospects, with it forecast to increase earnings by 28% in the current year and by a further 23% next year. When combined with a price-to-earnings (P/E) ratio of 33, this puts Boohoo on a price-to-earnings-growth (PEG) ratio of around 1.3, which indicates that there’s considerable capital growth potential on the cards.

Where Boohoo has an advantage over a number of its online peers is with regards to customer loyalty. Boohoo sells its own line of clothing and while it may not have huge pricing potential due to it being at the mid-to-lower price level, it does command a degree of customer loyalty. This should mean that Boohoo’s sales performance is relatively robust and perhaps more consistent than peers that are sellers of branded goods. And with the UK and world economies offering upbeat long-term growth prospects, Boohoo could prove to be an excellent buy in the coming years.

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Strategy progress

Similarly, AFC Energy (LSE: AFC) has considerable long-term potential. Although its share price has slumped by 33% since the turn of the year, it continues to make encouraging progress with its strategy. And with 2015 having been such a transformational year for the hydrogen fuel cell specialist, its recent share price fall could be a case of profit-taking from investors who are still sitting on gains of 48% since the start of 2015.

Looking ahead, AFC has considerable potential to deliver high levels of profitability in a world where cleaner energy is likely to be demanded in greater quantities. As such, the fact that it’s forecast to be lossmaking in each of the next two years may add to the company’s risk, but AFC also has the potential to deliver upbeat share price performance if news flow surrounding its eight 2016 milestones is positive.

This was the case in 2015 as the company derisked its proprietary fuel cell technology and while it remains a small and relatively high-risk stock, it could be of interest to less risk-averse investors.

Tough times

Meanwhile, online advertising specialist Blinkx (LSE: BLNX) continues to disappoint, with its shares being down 2% since the turn of the year. That’s despite the company making significant progress with its restructuring and efficiency measures, with it reporting that over $40m had been eliminated from its annual expenses in its most recent update.

In spite of this cost control, Blinkx remains lossmaking. Looking ahead, it’s expected to remain so in the current financial year and while its strategy seems to be sound and has included a successful rebranding, it may be wise for investors to await evidence of profitability before buying a slice of the business. After all, that’s what the market appears to be waiting for and without a black bottom line, Blinkx may struggle to ignite investor interest over the medium term.

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Peter Stephens owns shares of AFC Energy. 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.