The cash came from the sale, back when the company was known as Quindell, of the bulk of its insurance business to Australia’s Slater & Gordon. The plan all along was to hand over most of it to shareholders – and, incidentally, the Slater & Gordon share price has crashed since it took on the Quindell business, so the acquisition hasn’t looked too successful so far.

Anyway, the only problem with the planned cash handover was that court approval was needed. With the spectre of a Serious Fraud Office investigation into the company’s accounting and practices under the leadership of disgraced ex-chairman Rob Terry, I didn’t see that as likely to happen.

But it has, and the firm can now go ahead with its intended payout of 90p per share, which should happen by the end of the month – so if you were a shareholder as of 18 December you’ll get a nice pocket filler.

Share consolidation

The shares were suspended on the day of the decision and have been readmitted to trading today, and you might be surprised to see the price apparently more than doubling to 166p. But there’s also been a share price consolidation, in which every 10 of the old shares have been replaced by one new share, meaning that the current share price represents 16.6p per old share.

And that fall in value reflects the cash handout. Existing shareholders have 16.6p per old share plus 90p on its way, totalling 106.6p, or roughly what they had last week. If you buy now, of course, you won’t get the 90p cash.

But what does it mean for the company going forward?

Well, for one thing, a legal claim by a group who lost money is going ahead. Acting on their behalf, law firm Your Legal Friend is seeking £9.4m, claiming its clients were misled by previous Quindell accounts filings – those accounts were restated in August, turning previously claimed profits into hefty losses. Should this claim succeed, there will almost certainly be others to follow. Your Legal Friend already has a second claim from others in the pipeline, saying it has so far been contacted by more than 1,100 investors concerning their investments in Quindell.

And we still don’t know what the SFO outcome will be – though my hunch is that it will not be along the lines of “everything was just fine and Terry is a lovely bloke who’s never done a thing wrong in his life“.

Anything left?

But even putting that aside, if you buy shares today, your 166p would get you a stake in a small handful of lossmaking companies. The main ones are telematics firms Himex and Ingenie that are both burning cash, and the similarly unprofitable PT Healthcare. And there’s no sign of how Watchstone is going to be making any profits from these lame dogs any time soon.

So to those who bought in and made a profit from the cash handout, I say well done! But looking at what’s left of the company, it’s still in bargepole territory for me.

The post Has Watchstone Group PLC Finally Put Quindell To Bed? appeared first on The Twelfth Magpie.

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Alan Oscroft 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.

From starting December at a shade under 148p per share, InternetQ careered to a record low of 54.25p late last week. And although the London business enjoyed a brief uptick in recent days, shares have sunk by more than a fifth in Tuesday’s session and was recently dealing around 61p.

Winnifrith strikes again

The rockiness over at InternetQ was prompted by a worrying blogpost earlier this month from Tom Winnifrith, the man who helped sound the alarm concerning financial irregularities over at Watchstone Group (or Quindell, as it was formerly known).

Through the Share Prophets website, Winnifrith claimed that InternetQ had capitalised “the majority” of its operating costs, allowing it to report “high” profits. The stocks commentator also made a series of other statements, from questioning the firm’s debt levels and cash generation through to the value of acquisitions made in recent years.

In response, InternetQ took the unusual step of releasing a winding, 3,000+ word rebuttal to Winnifrith’s claims on Monday. The tactic initially did the trick, sending the stock value 36% higher as investors piled back in. But some of the mud has clearly stuck, hence why shares have resumed their downtrend today.

The market has taken little comfort from InternetQ’s impromptu trading update released last week in response to the share price descent. The Athens-located business advised that “there has been no material change to the operational and financial performance or outlook for the business,” and that “trading remains in line with management expectations.”

InternetQ advised in November that revenues galloped 20% higher between January and September, to €105.6m, a result that pushed pre-tax profit 4% higher to €7.9m.

And promisingly, InternetQ noted that it was experiencing “accelerated revenue growth in the second half of the year,” adding that “we expect that the continued shift towards adtech campaigns will have a positive effect on our top line and cash conversion going forward.”

So what does the City think?

Well, The Square Mile’s army of analysts certainly remain bullish concerning InternetQ’s investment case during the medium term, at least. The business has a solid record of generating double-digit earnings growth over the past few years, and further advances to the tune of 19% and 31% are projected for 2015 and 2016 correspondingly.

And thanks to evaporating investor appetite, these projections leave the business dealing on bargain-basement P/E ratios of 2.2 times for this year and 1.7 times for 2016.

Of course, many will point to Winnifrith’s success in highlighting irregularities at the likes of Quindell and more recently Globo as reason not to invest in InternetQ at the present time. But should the so-called Sheriff of AIM’s latest allegations prove wide of the mark, InternetQ could turn out to be a very canny purchase indeed.

The post Does Internetq Plc Represent a Bargain At Current Prices? 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.

No words can describe the anguish felt by shareholders of Slater & Gordon Limited (ASX: SGH) who watched helplessly as their shares more than halved in price last Thursday.

The shares plunged to a low of 89.5 cents just after midday before ending the session at 94 cents, down an incredible 51.4% for the day. They’ve lost more than 69% over the last week and 88% since early April and are now trading below their 2007 initial public offering (IPO) price of $1 for the first time.

To put that in perspective, the market is now valuing the company at just $330 million, down from roughly $1.1 billion last week.

Here are five things you need to know:

1. Existing concerns

Slater & Gordon’s share price had fallen dramatically before yesterday. This was the result of two separate investigations into its accounting activities; its controversial acquisition of Quindell earlier this year (setting it back roughly $1.2 billion); and concerns about its book-keeping processes.

2. Heavily Shorted

Slater & Gordon has become one of the most heavily shorted companies on the ASX (meaning investors are betting on the share price falling further). According to ASIC, 16.3% of its shares were shorted on 20 November, 2015, meaning any bad news is likely to have a dramatic impact on the share price.

3. Proposed changes to personal injury law

With that in mind, yesterday’s heavy decline came after the company released a market sensitive announcement. The company spoke briefly about proposed changes to personal injury law in the UK which, if implemented, would impact on the rights of people injured in road traffic accidents.

By increasing the “Small Claims Track” minimum from £1,000 to £5,000, the proposed changes could stop small claimants from using lawyers on a ‘no win / no fee’ basis. Instead claimants would have to apply directly to a defendant’s insurer.

Analysts are already sceptical whether the company can achieve its lofty earnings guidance, so yesterday’s news couldn’t have come at a worse time.

4. Quindell 

As if the Quindell acquisition hadn’t caused enough angst amongst shareholders, the vast majority of earnings from the division (now known as Slater & Gordon Solutions, or SGS) come from road traffic accidents.

5. Effect on earnings

Slater & Gordon said it doesn’t expect there to be any impact on its performance this financial year (FY16), while it reiterated its guidance for $205 million EBITDAW (earnings before interest, tax, depreciation and amortisation, less the movement in work in progress). However, if the proposed changes are implemented, it could well have an impact on earnings in FY17 and beyond.

As highlighted by The Australian Financial Review, UBS expects a 33% decline in revenue in FY17 while EBITDA could fall by 43%. The AFR said UBS has also set a 90 cents price target on the shares.

Should you buy?

Slater & Gordon’s share price collapse has no doubt intrigued some investors keen to pick up a bargain. Although the shares might look cheap, there is still a multitude of uncertainty surrounding the company and its circumstances which could force the shares even lower from here.

In other words, an investment today would seem more like speculation which is a dangerous game to play.

The post 5 Things To Know About The Slater & Gordon Limited Share Price Collapse appeared first on The Twelfth Magpie.

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The original author of this article, Motley Fool contributor Ryan Newman has no position in any stocks mentioned. You can follow Ryan on Twitter @ASXvalueinvest. 

Neither The Motley Fool Australia nor The Motley Fool UK has a position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A new start?

After a few truly horrible years, culminating in a Serious Fraud Office (SFO) investigation into its accounting practices and the actions of its directors, Quindell has done exactly the same and is now known as Watchstone Group (LSE: WTG). I can’t blame them for wanting to get away from that tainted name, and if a company under new management is genuinely making a clean start, it can be a good idea.

But is Quindell, sorry, I mean Watchstone, really out of the woods? No, it very much isn’t.

At the same General Meeting that approved the change of name, the company reiterated its intention to hand back the bulk of the cash it got from the sell-off of its Professional Services Division, which would provide shareholders with 90p per share up front, followed by a further 10p when it hopefully gets its hands on £50m that is currently in escrow.

The court will decide

But as Quindell pointed out, the return of capital is still subject to court approval, with the date of the court hearing set for Wednesday, 16 December. Because of the likely effect on the share price, whichever way the decision goes, trading in the shares will be suspended from that date until the market opens on Monday, 21 December.

So what is the court likely to decide? Well, it will only allow the firm to hand over all that cash if it believes it is retaining sufficient to enable it to meet its likely liabilities in the future. With the result of the SFO investigation not expected for some time, and with nobody yet having any idea what obligations it might put upon the company, I think it would be foolhardy to assume the handout is going to automatically get the nod.

On top of that law firm Your Legal Friend is pursuing action on behalf of one group of shareholders, with a second group waiting in the wings — and who knows how many more might come forward should the first group win their claim? So to Quindell/Watchstone shareholders, I’d suggest you don’t plan that big Christmas party from your windfall just yet.

Not with my bargepole

And if you’re thinking of buying the shares today, at 98p, think also about what kind of company you’d be left with if and after the cash pile is handed over. Essentially you’ll have two loss-making telematics subsidiaries, Ingenie and Himex, for which there are no visible signs of turnaround yet. And then there’s PT Healthcare, which is also making a loss.

I personally see no value in the new Watchstone apart from its current cash pile, and whether investors can get their hands on it is still very much uncertain — this is still definitely one I would avoid.

The post Goodbye Quindell PLC, Hello Watchstone Group plc appeared first on The Twelfth Magpie.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK owns shares in Google's Alphabet. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

In fact, IAG is now anticipating an operating margin of between 12% and 15% (rising from previous guidance of 10% to 14%), while sustainable return on invested capital is due to reach 15%, up from a previous target of 12%.

In addition to increased guidance, IAG also reported upbeat passenger statistics for October, with a rise of 17% over October 2014. Furthermore, the company’s load factor (the proportion of total seats filled) increased by 2.4 points to 83.4%, compared with 81.9% October last year.

Clearly, IAG is moving in the right direction and, looking ahead, the company is forecast to increase its earnings by 75% in the current year, followed by a further rise of 28% next year. Despite such strong growth, IAG trades on a price to earnings (P/E) ratio of just 11.4, which indicates that there is considerable upside potential over the medium to long term.

Similarly, house builder Bellway (LSE: BWY) appears to be undervalued, given the bright future prospects for the sector. Clearly, there is a fundamental supply/demand imbalance within the UK property market and, even if house prices do not rise at the same pace of recent years, the volume of houses sold is likely to remain buoyant — especially since the Bank of England continues to kick interest rate rises into touch.

So, with Bellway trading on a P/E ratio of just 9.7, it appears to offer huge upward re-rating potential as well as a wide margin of safety. And, with its earnings due to rise by 15% in the current year, there is a clear catalyst to boost investor sentiment. Additionally, with Bellway currently yielding 3.4%, despite paying out only 33% of profit as a dividend, it appears to be a very enticing long term income play.

Meanwhile, Quindell (LSE: QPP) recently updated the market regarding the payment of the funds received for the sale of its professional services division. The company now intends to pay them in two separate transactions, the first of which is expected to be 90p per share in December and the second is due to be 10p per share in late 2016 (both subject to court approval).

While this is later than previously expected, the real challenge for Quindell is turning its loss-making business around. In the first half of this year it made a net loss of £33m, which is worse than the first half of 2014 when it made a loss of £29m. As the company stated in its interim results, it faces reputational damage, and while its insurance technology business has potential, it’s likely to take time to develop the right strategy under a new management team.

Certainly, Quindell has the potential to turn its fortunes around in the long run but, at the present time, the likes of IAG and Bellway appear to be far more appealing purchases since they offer relative stability, great value and re-rating potential.

The post Are Quindell PLC, International Consolidated Airlines Group SA And Bellway plc Set To Soar? appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Bellway. 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.

I believe upside for Quindell is limited and that selling to buy into Tracsis could prove to be a good move. Here’s why.

Quindell

Quindell was on the brink of collapse earlier this year, as aggressive and unacceptable accounting practices unravelled, and the company faced a cash crunch. Disaster was averted at the eleventh hour when Quindell’s new board of directors managed to negotiate the sale of the company’s principal business — the Professional Services Division — to Australian law firm Slater & Gordon, for £637m.

The proceeds of the sale enabled Quindell to clear its debts and announce a return of capital to shareholders. The directors said they expected to return an “initial tranche” of “at least £1 per share and up to a maximum of £500 million in total”, “before the end of November 2015”.

However, the company has this week backtracked on both the quantum and timing of the initial tranche. The directors have said they now expect to return 90p a share, and that the court hearing needed to get legal approval for the return is not expected to take place until 16 December.

Quindell intends to return the remaining 10p a share in November 2016, assuming that the full £50m it placed into an escrow account to cover warranties given to Slater & Gordon is released. And there’s an estimated further £40m (9p a share) to come from the Australian company over the next two years, as historic hearing loss claims settle in the Professional Services Division.

However, the total of 119p isn’t a foregone conclusion. Court approval for a 90p return may not be forthcoming, because Quindell is currently under investigation by the Serious Fraud Office (which could result in fines) and is also facing a class action by shareholders who have lost money (which could result in compensation payments). Slater & Gordon, whose share price has sunk since acquiring the Professional Services Division, may also try to claw back something from the escrow account and seek to minimise its payments to Quindell for the historic hearing loss claims.

Furthermore, Quindell’s retained businesses — which are mainly focused on telematics — are loss making (over £33m in the first half of this year), so, with the shares at around the £1 level, I see little upside potential and plenty of downside risk.

Tracsis

Tracsis, which released its annual results today, is everything Quindell isn’t. Notably, Tracsis is profitable, generates cash and pays a dividend.

The company today reported a 14% rise in revenue to £25.4m, a 16% uplift in adjusted pre-tax profit to £5.8m, and a 19% rise in adjusted earnings per share to 19.16p. Tracsis has no borrowings, while strong cash generation saw cash on the balance sheet rise to £13.3m from £8.9m at the previous year end, supporting a 25% hike in the dividend (although, as with a lot of growth companies, the yield is modest at just 0.2%).

Tracsis is a leading provider of software and technology products and services for the traffic data and transportation industries. The company is well established in the UK and is developing its overseas footprint, where management sees “a significant opportunity for the future”.

The shares are currently trading at 435p, giving a trailing price-to-earnings ratio of 22.7. This falls to 19 on a forward basis, as a result of forecast 19% earnings growth. And the rating become even more attractive if you factor in the cash on the balance sheet, which represents almost 50p a share.

Given Tracsis’s strong record of earnings growth, near-term forecasts and longer-term prospects, I see far greater upside potential for this company than for Quindell.

The post Why I Would Buy Tracsis Plc But Sell Quindell PLC appeared first on The Twelfth Magpie.

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G A Chester 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.

There’s now been a change of plan, and the firm has reduced the size of its intended handout this year to 90p per share, to be payable “in December 2015 at a total cost of approximately £415 million“. The share price responded mildly to the news, with a drop of 1.7% to 100.5p at lunchtime — it’s been stable at around the £1 level for the past couple of months.

More next year, maybe

Further payouts are expected, with another 10p on the cards for the end of 2016, by which time Quindell expects to have the remaining £50m from the PSD sale released from escrow. And there should be more cash to come should contingency payments from PSD come good.

But before you pile in for a share of the cash, there are a few cautions you need to be aware of.

The first hurdle is that Quindell needs court approval to make any cash payments, and whilst the company is talking almost as though that’s a done deal, it most certainly isn’t. The court will have to decide whether Quindell is retaining a prudent amount of cash sufficient to deal with potential liabilities, and there could be some of those.

Can’t ignore the SFO

For one thing, there’s an inquiry by the Serious Fraud Office ongoing into the affairs of the company under the leadership of ousted ex-chairman Rob Terry. It commenced after an independent accounting analysis forced the company to restate its accounts for the last few years, turning profits into losses and reporting a pre-tax loss of more than £280m in 2014.

It’s likely to be some time before we hear the results of that, and if the court thinks there might be any liabilities to come from it, it might well have something to say about the intended handing over of 90p per share to shareholders.

Then we have legal action being pursued by law firm Your Legal Friend on behalf of a group of shareholders, with an estimate of claims of up to £9m before costs — and there is apparently a second group enquiring about similar action, which would be amount to a similar sum.

Less than the sum of its parts?

Then, of course, you’d need to think about what the remainder of the company is worth.

It now consists largely of two telematics subsidiaries, Ingenie and Himex, which are making losses. And there’s the loss-making PT Healthcare, of which Quindell acquired the 50% it did not own in September. New chief executive Indro Mukerjee has said he will address these losses, but I don’t see any realistic hope of these subsidiaries making profits any time soon.

So should you shell out £1 today to maybe get 90p next month together with your share of the ongoing losses at Quindell’s subsidiaries? Well, that’s up to you, but my pound is staying firmly in my pocket.

The post Quindell PLC Cuts Initial Payment To 90p And Delays It Until December appeared first on The Twelfth Magpie.

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Alan Oscroft 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.

Monitise

Shares in payment processing specialists Monitise (LSE: MONI) continue to languish around the record lows punched late last month, and I believe further pain could be in store. Currently rudderless following the departure of Elizabeth Buse in September, the tech specialists have a long way to go to reassure the market given a backdrop of intensifying competition.

Monitise’s position at the forefront of the mobile payments segment looked set deliver stunning earnings growth, particularly on the back of surging e-commerce. But since then the likes of Apple and Google have upped their game in this most lucrative sector, while Visa’s decision to cut its ties with the firm and go it alone came as a further bodyblow to the business.

In addition, Monitise’s decision to bin the development of bespoke applications in favour of creating generic client software casts further doubt over the appeal of their products. Even though the business inked a new development deal with Telefónica this week, the company still expects revenues growth to remain elusive until the end of 2016 at least. I reckon Monitise faces too many obstacles to justify investment at the present time.

Quindell

Compared with Monitise, telematics specialists Quindell (LSE: QPP) has seen its share price remain relatively calm in recent months. Still, I believe there is still plenty of intrigue surrounding the firm that suggests the worst could be far over.

The Hampshire business certainly cannot be accused of sitting on its hands following the damage of the past year, the firm overhauling its board in a bid to expunge memories of former CEO Rob Terry and the ‘strange’ share dealings that took place. But Quindell — which is also planning to change its name as part of its reputation-building drive — still faces a Serious Fraud Office probe into its previous profit overstatements.

And looking ahead, I am unconvinced by how exactly Quindell will generate revenues in the future. Sure, the field of telematics promises to be a huge growth sector in the years ahead. But the sale of its revenues-driving Professional Services Division to Australia’s Slater & Gordon leaves Quindell with nothing more than a cluster of small insurance specialists, leaving many to question the firm’s near-term outlook and possible survival. New CEO Indro Mukerjee certainly has his work cut out for him to convince investors of his turnaround plan for the firm, and I for one am not buying.

Blinkx

While differences can be made between the growth stories of software specialists Blinkx (LSE: BLNX) and Monitise, it does not make the former a purchase in my opinion. Rather, while Monitise was once a forerunner in the field of online payments, Blinkx — whose applications allow users find online videos more easily — was late to the ‘mobile’ party, a critical mistake for its growth prospects.

Although Blinkx is much more tuned into users’ modern viewing habits — mobile revenues almost tripled during the 12 months to March 2015, to $41.4m — the firm still has a lot of ground to cover to get sales chugging resoundingly higher.

 Following a profit warning back in August, Blinkx advised earlier this month that it expects revenues for April-September to clock in at just $90m, a serious slowdown when you consider the top-line clocked in at $215m in fiscal 2015. And the business expects to record an adjusted EBITDA loss of around $7m for the period.

With the company’s transformation plan still to deliver tangible rewards, not to mention sucking up vast amounts of capital, the City — like myself — does not expect Blinkx to flip into the black any time soon.

The post Why I’d Steer Clear Of Tech Terrors Monitise Plc, Quindell PLC & Blinkx Plc appeared first on The Twelfth Magpie.

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Royston Wild 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.

The Beginners’ Portfolio is a virtual portfolio, run as if based on real money with all costs, spreads and dividends accounted for. Transactions made for the portfolio are for educational purposes only and do not constitute advice to buy or sell.

After you’ve sold a share, are you always wondering whether you’ve made a mistake and looking back to see how it’s done? Well, while we shouldn’t dwell too much on them, it’s always good to re-evaluate our decisions with the benefit of history.

On that score, I’m satisfied I dumped Vodafone (LSE: VOD) at the right time. Since selling in December 2013 at a price of 234p, the share price has fallen to today’s 216p. Had I held, we’d have had an extra 19p to add in dividends to bring us back to the selling price, but I think the decision was still the right one.

At the time I thought the earlier undervaluation was out, while the shares were on a rising P/E with earnings falling, and nothing since then has changed my mind. In fact, I recently rated Vodafone a Sell based mainly on my inability to get a clear view of its strategy, coupled with the company’s policy of paying dividends far in excess of earnings. The City has a strong Buy rating out on Vodafone, but I’d always caution beginners to never buy something if they can’t understand it.

I have the opposite problem with Tesco (LSE: TSCO), in that I think I do understand its business pretty well — but I don’t like what I see. I hung on until March this year before I got rid of the FTSE 100‘s biggest supermarket. That was way too long, and I kick myself now when I think of my failure to see how badly things really were going.

Since selling at 232p, the price has slipped a further 19% to 188p, so at least I reduced what could have been a much bigger loss. Although the share price has been erratic, it’s actually up 12% over the past year, so would I consider buying Tesco today? No, not a chance.

Small cap disasters

My biggest mistake since the launch of this portfolio was buying into the Quindell (LSE: QPP) story and not paying enough attention to the company’s critics at the time. But as soon as I saw the obvious and realised I wouldn’t trust the company’s management with my dinner money, I dropped it like a hot potato.

That was in October 2014, and dumping at a price of 139p left a hole in the 196.5p I bought at, but today the price stands at 101p, so it was clearly a good call at the time — and during the depths of the crisis, when ex-chairman Rob Terry was telling us he was buying shares when he was in fact selling, the price crashed as low as 24p.

The subsequent rewriting of Quindell’s accounts proved my decision right, and my only puzzle now is why there’s anyone paying more than £1 a share for what I see as junk — they’re hoping for the promised cash handout, but I can’t see them getting it.

The only share I’ve sold that has since risen is Blinkx (LSE: BLNX), which was ejected in December 2014 after a meteoric price rise came crashing down. At 25.5p today the shares are up 8.5% on my 23.5p sell price, so was I wrong to sell? No, the firm’s catastrophic failure to meet mobile computing demands in timely fashion forfeited its early-mover advantage, and that’s what I’d bought in to — and when what you bought no longer exists or has changed unrecognizably, it’s time to sell.

The post The Beginners’ Portfolio Was Right To Sell Vodafone Group plc, Tesco PLC, Quindell PLC & Blinkx Plc appeared first on The Twelfth Magpie.

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Alan Oscroft 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 to next year, ASOS is due to revert back to growth following a three-year period of challenges. For example, it has struggled to develop the following among consumers abroad as had been expected by the market, so has forgone its desired level of margins in favour of improving sales numbers. And, in the long run, it seems to be well-positioned to post impressive levels of top and bottom line growth.

The problem for investors, though, is that ASOS’s share price remains rather high. For example, it trades on a price to earnings growth (PEG) ratio of 2.1 which, for a business which is due to report three consecutive years of declining profit, hardly screams ‘value’. As such, it may be prudent to await a pullback in its share price before buying a slice of what is undoubtedly a high-quality business.

Similarly, Gulf Keystone Petroleum (LSE: GKP) has a very appealing asset base, with the Iraq/Kurdistan region remaining one of the last great untapped resources of the world when it comes to black gold. And, despite being situated in close proximity of a major conflict zone and being owed £millions by the Kurdistan Regional Government (KRG), Gulf Keystone has continued to operate and make progress with its output.

Despite this, there are still question marks over the long term outlook for the business. The political situation in Iraq/Kurdistan remains very unstable and, although the KRG is beginning to make cash payments, there is still a risk that Gulf Keystone will not receive the full amount owed in a timely fashion. Add to this the low oil price and it appears as though there are simply better options elsewhere in the oil production space – especially with valuations being so low at the present time.

Meanwhile, Quindell (LSE: QPP) remains a company with a very unclear future. While it has sold off its professional services division to Slater & Gordon for around £640m, there is a question mark over whether it will be able to return a large chunk of the money to investors. That’s because it is the subject of a Serious Fraud Office (SFO) investigation as well as a potential lawsuit from disgruntled investors.

Furthermore, Quindell is at the very start of its process to develop into an insurance technology and telematics business. Although this could prove to be a highly successful move, there appears to be a long way to go before it reaches its full potential. As such, it appears to be a stock worth watching rather than buying – at least until there is greater clarity regarding its long term future.

The post Should You Avoid ASOS plc, Gulf Keystone Petroleum Limited And Quindell PLC? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.