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Are Sirius Minerals plc (+17%), Monitise plc (+7%) and 32Red plc (+38%) set for share price collapses?

In the last six months, shares in Monitise (LSE: MONI) have risen by around 7%. This is significantly better than their performance in 2015 when they fell by an incredible 88%. But 7% is only a small recovery and as a result, many investors may be wondering if further falls lie ahead for the mobile payments specialist and whether the company’s recent share price performance is merely a respite.

On the one hand, Monitise has significant long-term potential. It’s operating in a space that’s becoming increasingly popular and that’s likely to benefit from greater use by consumers over the coming years. Furthermore, with Monitise having won a number of blue chip clients, it seems to have a successful product and has been able to market it effectively.

However, Monitise remains a lossmaking entity and until this changes, investor sentiment may remain relatively weak. And with increasing popularity comes increased competition, which could cause Monitise’s financial performance to come under greater pressure. As such, while it’s a stock to watch, it may be prudent to wait for evidence of profitability before buying-in.

Long-term buy

Also rising in the last six months have been shares in 32Red (LSE: TTR). They’re up by around 38% during the period, which is somewhat surprising since the wider gaming industry is going through a challenging period and is seeing a significant amount of consolidation taking place.

However, 32Red is forecast to increase its earnings by 62% in the current year and by a further 28% next year. This has the potential to cause an improvement in investor sentiment over the medium term, which could cause a further rise in the company’s share price. And with 32Red trading on a price-to-earnings growth (PEG) ratio of only 0.3, there seems to be significant scope for capital gains in the coming years.

Certainly, forecasts can be missed, but with a wide margin of safety and a dividend yield of 2% which is covered 3.6 times by profit, 32Red seems to be a strong long-term buy.

Improving sentiment

Meanwhile, Sirius Minerals (LSE: SXX) has enjoyed a prosperous six months, with its shares rising by around 17% during the period. At least some of this rise is due to improved prospects for the wider mining sector as opposed to specific news flow released by Sirius. But market sentiment is also strengthening due to brighter prospects regarding funding for the £1bn-plus potash mine that Sirius Minerals is planning to develop.

Clearly, raising funds for such a major project at a time when commodity prices have been under sustained pressure will be challenging. However, Sirius Minerals has recorded impressive crop study results and with an apparent high demand for its polyhalite fertiliser, as well as a more bullish outlook on the wider resources sector from investors, it could be a stock to watch in 2015.

However, with a number of other resources stocks being dirt cheap and highly profitable, there may still be better options available elsewhere for all but the least risk-averse of investors.

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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.