However, in some cases there may be investment opportunities on offer from stocks that other investors have deemed to be relatively unattractive. They may offer wide margins of safety that could lead to high returns over the long run.

Improving prospects

One company which seems to be unpopular among investors at the present time is Glencore (LSE: GLEN). Although its share price has increased by around 19% in the last year, many of its sector peers have outperformed the company despite its prospects having improved significantly in recent years.

After a period of losses, the company now seems to be in the midst of improving financial performance. Its focus on boosting its balance sheet through debt reduction appears to have created a more solid foundation for future growth. Similarly, its reduced costs and more efficient business model look set to lead to a rise in its bottom line of 42% in the current year. This has the potential to catalyse investor sentiment and push its share price higher.

Low valuation

Despite its upbeat outlook and improving performance, Glencore trades on a price-to-earnings (P/E) ratio of just 12. This suggests investors remain cautious about its future prospects even though it’s now in a strong position to deliver sustainable growth in future years.

Certainly, the commodity sector is likely to remain volatile. But with the company now focused on materials used in electric vehicles, it appears to have a bright future given the trend towards cleaner vehicle usage across the world. Alongside the potential for a rapid rise in dividends as profitability moves higher, this could lead to high total returns for the company. As such, now could be the perfect time to buy it – even if many investors remains cautious about its outlook.

Growth at a reasonable price

Also offering a relatively low valuation right now is billing, charging and customer relationship software solutions provider Cerillion (LSE: CER). The company released a trading update on Monday which showed revenue for the first half of the year is expected to increase by 12% versus the previous year.

While EBITDA (earnings before interest, tax, depreciation and amortisation) is due to fall to £1.4 from £1.5m in the prior period, this is largely due to adverse currency movements. On a constant currency basis, EBITDA is expected to be around 13% higher than in the previous year.

Looking ahead, Cerillion is forecast to post a bottom line rise of 30% in the current year. Despite this, it trades on a price-to-earnings growth (PEG) ratio of just 0.6, which suggests that it’s unloved by investors. It also indicates that there could be significant capital growth potential ahead over the medium term.

The post Why I believe the Glencore share price is now too cheap to ignore appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Fertiliser supplier fades

Potassium digger African Potash (LSE: AFPO) collapsed 43% in Friday business, after furnishing the market with disappointing operational news.

African Potash advised that the severe drought hitting southern Africa has prompted a deal to supply 20,000 metric tonnes of urea to a COMESA customer to fall through. The client in question is still awaiting confirmation of order from its own customers, African Potash advised.

On top of this, particularly dry conditions in Zimbabwe has seen an agreement inked back in December with Windmill fall through, African Potash said.

In brighter news, African Potash also announced it had signed a participation agreement with Safyr Commodities — which itself has inked conditional sales agreements with leading Zambian fertiliser distributor Nyiombo Investments — for the supply of 50,000 tonnes of urea and NPK.

But investors have naturally given this news short shrift. African Potash is already on shaky ground, the company having seen pre-tax losses swell to $716,000 in July-December, up from $660,000 a year earlier.

Given the scale of unfavourable climate conditions on its revenues outlook, I believe African Potash is a risk too far at the present time.

Software play strides

Cerillion (LSE: CER) has seen its share price jump almost 8% today, after it advised the market that results for the first half of the year “are anticipated to be in line with management expectations.” The software play anticipates reporting that revenues and EBITDA will have advanced 11% (to c.£6.9m) and 21% (to £c.1.1m), respectively, between October and March, when it announces its interim results for the half year in late May.

Cerillion — which provides software for billing, charging and customer relationship management (or CRM) — announced in recent weeks the signing of a $2.4m contract with an existing customer which Cerillion describes as “a multi-service communications provider in the Americas.”

The company provides services for a broad range of customers in established and emerging economies alike, and sales continue to pick up speed. Cerillion currently boasts 75 major clients across 40 countries, and I expect cutting edge products like its Cerillion Skyline package to keep sales spiralling higher.

On the precipice?

I am not so optimistic over the growth outlook of Vedanta Resources (LSE: VED), however. Sure, the share price may have added an extra 33% during the past month as commodity  prices have rallied. But as I have previously cautioned, the fundamental picture for the resources markets remains less than encouraging.

Vedanta Resources continues to hike production across its main markets to offset the impact of lower resources values. Indeed, the business churned out record amounts of copper cathodes, aluminium, electricity and silver during January-March, mirroring similar measures by many of the world’s major commodity producers.

But a drastic slowdown in Chinese economic growth raises serious questions over where exactly all of this excess material will end up.

Given this backdrop, I believe recently-revived commodity prices are in danger of experiencing a severe reversal, putting the share values of chargers like Vedanta Resources in equal peril.

The post Should You Buy Vedanta Resources plc, African Potash Ltd & Cerillion PLC Today? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. 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.