Up 300%+ In 5 Years: CVS Group Plc, GW Pharmaceuticals Plc And Pantheon Resources Plc

Do five-year increases in share prices of 685% at CVS Group (LSE: CVSG), 437% at GW Pharmaceuticals (LSE: GWP), and 314% at Pantheon Resources (LSE: PANR), make these three a handful of the best shares most investors have never heard of?

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Profits vs debt

Veterinarian chain CVS Group has been a quiet winner over the past five years as its acquisition-led model of growth sent earnings up 75% in the same period. The company has funded its purchases through the debt markets and racked up £46m of net debt. Pre-tax profits of only £8.5m certainly make this level of debt a worry, but the company did generate a very good £22m of operating cash flow in 2015.

Acquisitions aside, like-for-like sales rose 6.8% last year and the company's underlying business is quite sound. Recurring revenues from its 'Healthy Pet Club' scheme brought in 13% of total sales and dividends have increased steadily in the past years. The company is expected to continue growing earnings by double digits over the short term but significant growth is already baked into share prices, which trade at 30 times forecast earnings. While CVS Group's underlying business continues to perform well, this lofty valuation would keep me on the sidelines for the time being.

Promising pipeline

GW Pharmaceuticals, which creates cannabis-based medicines, made headlines last week as shares doubled on the back of successful clinical trials for a pediatric epilepsy treatment. The promising trials mean the drug in question, Epidiolex, is now on track for submission for clinical approval in the US later this year. This could set the stage for a commercial roll out in 2017, becoming GW's second treatment to market.

Crucially for a small company with little current revenue, GW has next to no debt and $355m cash on hand after a successful dual-listing in New York. The company's decision to retain all control over Epidiolex also looks to be a wise move as it has considerable upside if the treatment sells well.

The growing acceptance of the medical benefits of cannabis-derived treatments has created an interesting niche for GW and the company's well-stocked pipeline could treat investors well over the long term. However, the company is still several years away from turning a profit and still has to clear regulatory hurdles for several treatments.

Oil & gas producer Pantheon Resources is another company whose stunning share price performance is due to long-term prospects rather than current business fundamentals. The tiny US fracking firm booked only £3,000 in sales last year as it's only now beginning to report positive developments in the oil fields it owns.

Like GW, Pantheon's healthy balance sheet leaves it well placed to survive until it can begin to drill the approximately 160 wells it anticipates constructing. Most attractively, it will be profitable even with crude prices below $30/bbl. Analysts are expecting the company to turn its first profit next year although shares trade at a pricey 30 times expected earnings. Narrowly-focused Pantheon may be a bit too risky for many investors, but its low costs and lack of debt could be attractive to those who are more risk-tolerant.

The growth prospects for Pantheon may be quite high, but investing in a Texas fracker that has yet to pump significant amounts of crude remains a risky investment. For investors seeking high growth potential with greater stability, I recommend reading the Motley Fool's latest free report A Top Growth Share.

This classic British brand has grown sales every year since going public in 1997 and the Motley Fool's top analysts think the company could triple in size in the coming years.

To discover this company for yourself, simply follow this link to read your free, no obligation copy of the report.

Ian Pierce 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.