27th October 2014
With Halloween fast approaching, Graham Spooner, investment research analyst at The Share Centre, picks four high risk stocks that have the characteristics to give investors a fright…
A lack in sales growth has haunted Modern Water making it a daunting option for many investors. The company has also seen no significant take up in its desalination plants. It has struggled to take advantage from the world’s growing water shortage and shareholders have suffered a scary decline in the value of their holdings. However, we believe it could benefit in the long-term from global pressures that are set to increase. We recommend Modern Water as a ‘buy’ for investors who aren’t freaked out by the higher risk nature of this small company or have an interest in green issues. Demand for fresh water is only going to increase as the world’s population grows and the company’s water monitoring division has an improving potential order pipeline.
Debt on the balance sheet has been the skeleton in the cupboard for general retailer Findel. The group has restructured terrifyingly large parts of its business and continues to see mixed sales performance. Despite this, we believe the company’s turnaround still has some way to go and its valuation does not reflect its potential. If the risky factors of this stock don’t scare investors away, we recommend Findel as a ‘buy’. The company’s gearing ratio still has a significant way to go before it looks healthy.
Anpario, a provider of natural feed additives, is an unnervingly small UK company trying to build a name for itself in a competitive international market. Whilst this may ward off some investors, the group already has a respectable geographical spread helping offset regional, financial and geopolitical concerns. Growing global population and improving living standards in developing countries should increase demand for meat and fish. However, adverse political situations have spooked the organic animal feed market in the Middle East and Africa. We recommend Anpario as a ‘buy’ for investors who are not scared stiff by a high risk, longer term niche idea.
The unauthorised payments investigation on the back of management activity is a stab in the back for Afren investors. Additionally, the recent slump in the price of oil along with the instabilities in Iraq could leave them feeling weak at the knees and sees the risk profile of the stock frightfully high. However, for those feeling brave, we recommend Afren as a ‘buy’. The lower share price and a p/e multiple of 8 times means the shares once again look attractive. The company has been building on its impressive production growth rate of the past few years and we believe it has the potential to continue.