With that in mind, here are two shares which could benefit from an investment tailwind in future years. While small and relatively high risk, they may deliver impressive total returns in the years ahead.

Improving performance

Reporting on Tuesday was West African gold miner Avesoro Resources (LSE: ASO). The company announced production results for the quarter to 30 June, with total gold production being 15,824 ounces. This represented a 6% increase on the previous quarter, with its 2017 production guidance being maintained at between 90,000 and 100,000 ounces. Furthermore, the company’s cash cost of $750-$800 per ounce remains in line with guidance, as does an all-in sustaining cost of $925-$975 per ounce of gold produced.

Clearly, demand for gold has been somewhat volatile during the course of 2017. Investors were anticipating higher inflation than has been recorded in the US, while interest rate rises have kept the price of the precious metal pegged back to at least some extent.

Outlook

Looking ahead, uncertainty in the outlook for the global economy could increase demand for gold as it has done in the past. Fears surrounding US spending plans, China’s transition to a consumer-focused economy and Brexit may weigh on investor confidence. This may make gold miners such as Avesoro more popular and lead to a higher share price for the company.

Although it has risen by 82% since the start of the year, there could be more upside potential owing to its expected move from loss to profit next year. This could positively catalyse investor sentiment and push its share price higher.

A better option?

While Avesoro is currently a lossmaking business, other gold miners such as Highland Gold (LSE: HGM) are delivering rising profitability right now. The company is set to increase its earnings by 21% in the current year, followed by further growth of 26% next year. This puts its shares on a price-to-earnings growth (PEG) ratio of just 0.3, which suggests they offer a wide margin of safety.

As well as its growth potential and value appeal, Highland Gold also offers strong income prospects. The company currently yields 6.4% from a dividend which is covered 1.5 times by profit. This suggests that dividends could increase at a similar pace to profit in future and leave the business with sufficient capital to reinvest in its asset base for future growth. This mix of income, growth and value potential could make Highland Gold a worthwhile buy at the present time.

The post 2 hot small-cap stocks that could help you retire early appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any 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.

For example, the world’s largest silver miner Fresnillo (LSE: FRES) trades on a price-to-earnings growth (PEG) ratio of just 0.6, which indicates that its shares are undervalued at the current time. That’s based on very strong growth forecasts in the next financial year, with Fresnillo expected to increase its bottom line by as much as 66% due in part to a rising silver price.

Certainly, there’s the potential for the silver price to fall as it did in recent years prior to the recent pickup. However, Fresnillo was able to remain profitable even when silver hit its low points following a 70% fall between 2011 and 2015. This shows that the company’s cost base is relatively low and that while a fall in the silver price can’t be ruled out, Fresnillo is likely to survive and emerge from it in good shape.

Tough times

While Fresnillo has performed well as a business in recent years, Glencore (LSE: GLEN) has endured a rather more difficult period. Like most of its peers, Glencore has been hurt by falling commodity prices and this has caused investors to question the company’s financial standing. Specifically, the market has become concerned about Glencore’s debt levels and there was a general feeling among investors that the company was riskier than a number of its similarly-sized sector peers.

In response, Glencore is implementing a strategy that’s eeing asset disposals being made, efficiencies being generated and the company’s balance sheet risk reduced. Although this is an ongoing process that will take time to complete, investors appear to be upbeat about the company’s prospects to become more financially sound and better able to cope with a prolonged and severe downturn in commodity prices.

With Glencore trading on a PEG ratio of just 0.6, it appears to offer a sufficiently wide margin of safety to merit investment at the present time. It has relatively high risks but considerable potential rewards.

Margin of safety

Meanwhile, Highland Gold (LSE: HGM) has benefitted from the rising gold price in 2016, with the company’s shares surging upwards by 71% since the turn of the year. However, with US interest rate rises on the horizon, the appeal of gold could wane even if uncertainty across global markets makes its status as a store of wealth more appealing to nervous investors.

In such a scenario Highland Gold seems to be relatively well-prepared. It has a debt to equity ratio of 34%, which indicates that its balance sheet is modestly leveraged. Furthermore, it has strong cash flow, with free cash flow standing at $65m in the 2015 financial year and just under $39m in the 2014 financial year. And with Highland Gold having a PEG ratio of just 0.2, it seems to have a sufficiently wide margin of safety to merit investment from less risk-averse investors.

The post Would Glencore plc, Fresnillo plc and Highland Gold Mining Ltd survive a commodity price collapse? appeared first on The Twelfth Magpie.

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Peter Stephens 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.

Looking ahead, there could be further share price rises to come. A key reason for that is the uncertainty which continues to exist among investors. A number of major risks currently face the global economy, with US interest rate rises, a slowing China and the potential for a Brexit all likely to cause considerable volatility and potentially even fear among investors. As a result of this, gold could become increasingly popular as investors seek out a perceived store of wealth during turbulent economic times.

Price rises ahead?

Due to this potentially upbeat outlook for gold, Centamin and Highland Gold could see their share prices rise yet further. In the case of Centamin, it’s currently in the process of ramping up production as it seeks to produce around 500,000 ounces of gold in 2017. And with its bottom line forecast to rise by 35% in the current year it trades on a price-to-earnings growth (PEG) ratio of just 0.4. This indicates that Centamin offers a sufficiently wide margin of safety to merit investment at the present time.

Similarly, Highland Gold has a relatively appealing risk/reward ratio. It’s expected to increase its bottom line by 47% in the next financial year and this puts its shares on a PEG ratio of just 0.1. Certainly, Highland Gold is a relatively small business and so it’s likely to be riskier than a more diversified and more financially stable peer. However, this seems to be adequately priced-in to its valuation and it could continue to soar.

One for the long run

Meanwhile, Sirius Minerals (LSE: SXX) has enjoyed a strong first part of 2016. Its shares have risen by 27% year-to-date as investors continue to be upbeat regarding its long-term potential. And with it intent on building a £1bn-plus potash mine in York and recording relatively positive crop study results, Sirius Minerals could become a very profitable mining play in the long run.

However, with Centamin and Highland Gold set to deliver impressive profit growth right now and having such attractively priced shares, they seem to be better buys than Sirius Minerals. Furthermore, with investors being uncertain and having the potential to become more so in the coming months, gold miners could act as a hedge against falling share prices due to their link to the price of gold.

Therefore, while Sirius minerals may be of interest to less risk-averse investors, Centamin and Highland Gold seem to offer the more compelling investment cases at the present time.

The post 2 miners I’d buy ahead of Sirius Minerals plc: Centamin plc and Highland Gold Mining Ltd appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Centamin. 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.

Ryanair’s adjusted net income rose by 43% to €1.24bn for the year ending 31 March. This was at the top end of the airline’s own forecasts but lower than those of City analysts, who had pencilled-in a figure of €1.31bn.

The outlook for the current year also fell slightly below expectations. Although low oil prices should be a boon for airlines, they’re also putting pressure on ticket prices as competition forces airlines to cut their prices to reflect the lower cost of fuel. This effect, plus strike action in several European countries, is expected to affect Ryanair’s Q1 results.

The Irish airline said that full-year adjusted net income is expected to rise by 13% to between €1,375m and €1,425m. That’s slightly below consensus forecasts of €1,540m. Ryanair shares now trade on about 11.5 times forecast earnings for the year ahead. That seems enough to me. I don’t expect big gains in the near future.

Will outsourcing profits keep rising?

Outsourcing specialist Mitie Group (LSE: MTO) said today that adjusted earnings per share rose by 0.8% to 25p last year, despite a 1.8% fall in group revenue. The total dividend was increased by 3.4% to 12.1p, giving a yield of 4.4% at current prices.

At a share price of 275p, Mitie appears to be quite attractively priced. The stock trades on a trailing P/E of 11. However, it’s worth remembering that outsourcing businesses like Mitie have low profit margins and can be hit hard by one-off costs from problem contracts.

Last year, Mitie had to write off £46m relating to energy industry customers hit by the downturn in oil and gas. The group warned today that some new projects have been delayed or cancelled until after the EU referendum.

Earnings growth is expected to be about 4.5% this year, putting the shares on a 2016/17 forecast P/E of 10.9. A forecast yield of 4.6% means Mitie could be worth a closer look as an income buy.

Too late to buy Russian gold?

Russian firm Highland Gold Mining (LSE: HGM) has already risen by 67% this year. I’d understand if you thought it was too late to invest in this rebounding gold miner. But I think that further gains may be possible.

Highland Gold issued a trading update this morning, confirming its guidance for gold production of 255,000-265,000 ounces this year. That’s broadly unchanged from last year, but the gold price has risen by 17% to $1,250/oz. so far this year.

Last year’s accounts show that Highland Gold’s all-in sustaining cost of mining is just $640/oz. If gold prices remain at current levels, then free cash flow and profits should rocket higher.

Adjusted earnings are expected to rise from 4 cents to 16 cents per share this year. That’s an increase of 300% and puts the stock on a modest 2016 forecast P/E of 8.6. Further gains are expected in 2017.

In my view, Highland Gold’s recovery isn’t yet complete. I believe the shares could continue to rise.

The post Will Ryanair Holdings plc, MITIE Group plc and Highland Gold Mining Ltd surge higher after today’s news? appeared first on The Twelfth Magpie.

More reading

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Roland Head 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.

Looking ahead, the price of oil seems likely to remain relatively low in the short-to-medium term. Certainly, there’s potential for it to rise in the long run as demand from emerging economies increases and supply stabilises. However, in the short run things could get worse before they get better for Plexus and its share price could come under a degree of pressure.

With Plexus forecast to post losses in both the current year and next year, its outlook is rather downbeat. And with there being a number of other oil and gas companies that are profitable and offering good value for money, there appear to be better options available elsewhere.

Gold standard

While Plexus’s share price has been falling this year, shares in Highland Gold (LSE: HGM) have soared by around 60%. A key reason for this is the rising price of gold, with a changing stance from the US Federal Reserve being a key reason for this.

While the Fed had previously been expected to raise US interest rates up to four times this year, it’s now expected to do so just once or maybe twice. This means that non-interest-producing assets such as gold should hold greater appeal and as such, its price has strengthened.

Clearly, Highland Gold’s share price is highly dependent on the price of gold and with uncertainty surrounding the global economy being high, it would be of little surprise for the precious metal to continue to rise. Therefore, against this backdrop and with Highland Gold expected to increase its earnings by 47% next year and its shares trading on a price-to-earnings-growth (PEG) ratio of only 0.1, it seems to offer a very enticing risk/reward ratio.

Risky but rewarding

Meanwhile, shares in 88 Energy (LSE: 88E) have soared in 2016. They’ve risen by 348% year-to-date after the company reported a major discovery in Alaska, with that boosting investor sentiment in the stock due to the potential for significant production in future. And with news flow since then being positive in terms of 88 Energy announcing an increase to the independent resource estimate at the Icewine project, it’s little wonder its shares have been in demand – as evidenced by the oversubscribed share placing a few weeks ago.

While the potential rewards of investing in 88 Energy are considerable, it remains a relatively risky stock. Certainly, it has had positive news flow in recent months but this can change quickly and with 88 Energy likely to require further fundraising, it may only be of interest to less risk-averse investors.

The post Are 88 Energy Ltd, Highland Gold Mining Ltd and Plexus Holdings plc too risky to buy? appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Peter Stephens 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.