It is time for the annual tradition of examining the price performance of the biggest movers on the ASX for the prior calendar year in hopes of finding worthy future investments.  The Top Ten and Bottom Ten Lists provide fodder for most investors, regardless of investing philosophy.  Value investors scour the Bottom Ten Lists looking for stocks that crashed for reasons that are likely to be altered in the future.  Growth investors search the Top Ten Lists for stocks with favorable economic conditions continuing into the future.
In both cases investors consider past performance but may also rely on their own view of analyst predictions of future earnings.  As all new investors eventually learn, analysts can be wrong.  The best performing stock on the ASX for calendar year 2015 was Blackmores Limited (BKL) with share price gains for the year of an astounding 519%.  One year ago consensus analyst forecasts for BKL’s EPS (earnings per share) growth over two years was a positive 64.7%.  One year later Blackmores moved from the Top Ten to the Bottom Ten List for calendar year 2016, with its share price dropping 53% for the year.  The company manufactures healthy foods for humans and animals but the condition that sent the stock price soaring was the demand for infant formula in China, a market Blackmores was entering.  Not many saw it coming, but those conditions changed as Chinese regulators stepped in with new restrictions on that market.  This is a stock that could be plucked from the Bottom Ten List by value investors, as it appears analysts believe market conditions will turn favorable for Blackmores over the next two years, with an EPS growth forecast of +15.9%.
In this year’s Top Ten List from the ASX 200 we find five stocks meeting the rigid criteria of EPS growth forecasts exceeding 50%.  Here is the entire list with growth estimates, price performance, and three and five year total shareholder returns.

Note that with the exception of renewable energy provider Infigen Energy (IFN) and steel producer BlueScope Steel (BSL), the remaining Top Ten performers were all in the Materials Sector operating either as direct miners or mining services providers. 2016 saw rising commodity prices unanticipated by many analysts and industry experts.  Oil rose 45% while iron ore went up 86%; but the biggest surprise of all may have been the spikes in both coking coal for steel-making – up 156% – and thermal coal for energy generation – up 87%.
However, looking at the two year growth estimates year by year reveals analysts see declines in FY 2018.  In addition, seemingly huge growth percentages are often the result of a negative starting point.  Let’s look at the numbers for each of the five stocks with growth forecasts in excess of 50%.

• Another factor that should be taken into consideration when looking at analyst estimates is the number of analysts. 
• Infigen has only two major analysts covering the stock, with Strong Buy and Buy ratings.  
• Galaxy has five analysts, with two each at Strong Buy and Buy and one at Underperform.  
• Whitehaven has 12 analysts on the stock with a wide range of opinions, from three each at Strong Buy, Buy, and Hold; two at Underperform; and one recommending investors Sell the stock.
• Mineral Resources has five analysts; one each at Strong Buy and Buy and three at Hold.
• South32 has the most analyst coverage with 17 analysts; two at Strong Buy; six each at Buy and Hold; two at Underperform; and one with a Sell recommendation.
Despite its relatively small market cap of 722 million and lack of analyst interest, Infigen’s stock price had been doing well in 2016 due to the sale of its US assets and subsequent balance sheet improvements as well as solid earnings growth and a strong growth forecast.  Then one of the most unanticipated events in recent history occurred in the US.  Donald John Trump, a man who once scoffed at the notion of climate change calling it a Chinese perpetrated hoax, was elected President of the United States.  In another turnabout that should make history, the investing community that had feared Trump’s election suddenly realized his policies could be good for global growth.   
Renewable energy stocks along with gold stocks tanked while stocks to benefit from defense and infrastructure spending in the US and the spread of improved economic conditions across the world went up. The following price movement compares Infigen to diversified miner South32 (S32).

The other stock in the table that shows no drop in estimated growth between FY 2017 and FY 2018 is lithium miner Galaxy Resources (GXY). Demand for lithium is exploding as the world increasingly turns to lithium ion batteries and Galaxy boasts high grade lithium carbonate.  The price of lithium carbonate has risen dramatically in response to the demand.  Here is a price chart from the London based consulting firm Benchmark Mineral Intelligence (BMI): 

Mineral Resources (MIN) deserves mentioning as analysts see only a minor drop in EPS between FY 2017 and FY 2018.  The company operates as a miner as well as a major provider of mining services to the industry via three subsidiary companies.  The range of services extends from crushing to processing to materials handling and logistical support; as well as pipeline and infrastructure development.  Mineral Resources is a JV (Joint Venture) partner in the Mount Marion Lithium project in Western Australia along with Neometals and Jiangxi Ganfeng Lithium Co, Ltd. The company also has subsidiaries developing manganese and iron ore mines.
While the Bottom Ten List for 2016 does not have any stocks with growth estimates exceeding 50% there are some interesting opportunities.  Here is the table for the worst performing ASX 200 stocks for the calendar year 2016.

For investors looking for solid historical track records, five of these stocks are newcomers to the ASX listing in roughly the last two years.  Surprisingly there is only one stock – Estia Health (EHE) with negative earnings forecasts but only four of the ten have forecasts of 25% or more, far below the high estimates from the Top Ten List.
The stock with the best forecast – Bellamy’s Australia (BAL) at 30.9% – is risky enough that cautious investors might want to adopt a “wait and see” attitude.  The shares have been in successive trading halts for about a month while company management “renegotiates with suppliers,” with one of them being Bega Cheese (BGA).  Bega directly entered the infant formula business with a joint venture with Blackmores (BKL). The share price of all three of these stocks has gone up a bit in the New Year and analysts appear confident all will come out of the Chinese shakeup and continue to grow.  Investors with appetite for risk can look back to the dramatic reversal of fortune of Cochlear Limited (COH) from a product recall analysts said could damage Cochlear’s brand reputation, and take the plunge by investing in one or more of these three former market darlings.
Sirtex Medical (SRX) provides treatments for patients with liver cancer and has rewarded long term shareholders with 16.8% total shareholder return over ten years along with improving returns to 26.8% over five years.  Investor concerns over dosage sales of the company’s flagship treatment have hampered the stock price and the company’s trading update warning of slower sales growth sent the share price crashing.  On 8 December of 2016 the share price was $ 25.49 which plummeted to $16 following the announcement.  The slowdown appears to be centered largely in the America’s but company management believes three upcoming studies on the efficacy of the Sirtex treatment will reverse the slowing trend.
The stock to watch here may be iSentia Limited (ISD).  The company provides its commercial and government clients across the Asia-Pacific region with “media intelligence” services.  The company began back in 1982 with a collection of services that monitored the press for news stories about or affecting its clients. The digital age revolutionized media and in 2004 the company introduced its software as a service platform, Mediaportal.  iSentia has made key acquisitions in the last decade and now offers monitoring of social media as well as digital content marketing services to its clients.  
Despite its presence in a very dynamic business environment, the company issued a profit warning in November of last year, sending the stock price downward.  The company went public in June of 2014 with 2016 turning into a rocky year for investors with the stock price whipsawed by concerns over the cost of acquisitions and less than anticipated growth.  Here is iSentia’s price performance since it began on the ASX.

Company revenue rose 22% from FY 2015 to FY2016 with profit increasing 32%.  Historically media monitoring involved cutting clippings from printed sources to allow client companies to learn what was being said about them.  In the early days of the Internet, monitoring meant scouring traditional news and opinion sites.  Blogs were arguably the first non-traditional sources and now Social Media has opened virtually limitless sources where people can say what they have to say about a company or a government agency. The holdouts that doubt the growing power of social media and the need for media monitoring might want to become a follower of arguably the most successful user of social media in history – US President-Elect Donald John Trump.
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