Are BHP Billiton plc, Staffline Group plc and SafeCharge International Group plc about to make colossal comebacks?

Updated
BHP Billiton mine
BHP Billiton mine

With shares in BHP Billiton(LSE: BLT) having slumped by 41% in the last year, investor sentiment towards the diversified resources company is likely to be weak. After all, the outlook for the wider resources sector remains highly uncertain and it wouldn't be a major surprise for commodity prices to experience another significant downturn.

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However, BHP Billiton appears to be well-placed to cope with further challenges in its markets. That's at least partly because it has a very strong balance sheet with impressive cash flow. This should allow it to invest more heavily in maintaining and developing its asset base, while the diversity of the business also brings a clear advantage over rivals. This is evident from both a geographic and resource basis, with BHP Billiton having the potential to deliver more consistent returns than a number of its resources sector peers.

Looking ahead, BHP Billiton is forecast to increase its bottom line by as much as 164% in the next financial year. Clearly, this is heavily dependent on commodity prices, but the efficiency measures and cost-cutting BHP Billiton has undertaken in recent years are clearly starting to pay off. With its shares trading on a price-to-earnings growth (PEG) ratio of 0.2, they could be set for a colossal comeback.

On track

Also struggling in recent months have been shares in recruitment and staffing solutions company Staffline (LSE: STAF). Its shares have fallen by 25% since the turn of the year and this is at least partly due to concerns among investors for the future of the UK economy. With an EU referendum taking place next month and interest rate rises on the horizon, investor sentiment towards more cyclical companies such as Staffline has come under pressure.

However, with Staffline stating in its most recent update that its performance as a business remains strong and that it's on track to meet expectations for the full year, now could be a good time to invest. Furthermore, it trades on a price-to-earnings (P/E) ratio of 9.6, which indicates significant upward rerating potential.

Take another look

Meanwhile, the share price performance of SafeCharge(LSE: SCH) has been hugely disappointing over the last year. The payments services provider has posted a fall in its valuation of 17% during the period despite its AGM statement saying it had delivered a strong Q1 performance, with sales and profit ahead of budget. Furthermore, SafeCharge has strengthened its management team and also delivered major new payment platforms for key customers.

Looking ahead, SafeCharge is forecast to increase its earnings by 36% in the current year and by a further 14% next year. This puts it on a PEG ratio of just 1.1 and with its shares yielding 3.7% from a dividend covered a healthy 1.7 times by profit, SafeCharge seems to have considerable growth, value and income appeal for long term investors.

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Peter Stephens owns shares of BHP Billiton. 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.

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