Do Shares Of HSBC Holdings Plc, Glencore Plc And Telit Communications Plc Have The Potential To Double?

With low valuations and much higher share prices in the not-too-distant past, could HSBC Holdings (LSE: HSBA), Glencore (LSE: GLEN) and Telit Communications (LSE: TCM) rebound to reward shareholders with 100% returns?

///>

On Monday HSBC reported a disappointing 7% slump in adjusted annual profits and a 1% fall in revenues for 2015. This backsliding was unfortunate, but these results don't change the thesis for long-term investors. The company is in the midst of a dramatic restructuring and short-term pain was to be expected. For investors who believe universal banking is still a sustainable model, and that Asia will be the main source of global growth in the coming decades, HSBC should still be an attractive investment.

Shares are currently trading at nine times forward earnings, suggesting there's little growth currently baked into prices. If management can increase annual return on equity from the current 7.2% to the 2017 target of over 10%, shares could be in for significant upward rerating. This will be dependent on continuing to shift assets from low-return European and Americas operations to high-return Asian divisions. Coupled with significant cost-cutting actions underway and an eventual rebound in Asian economies, I believe HSBC shares do hold the potential to double. It must be said though that proponents of HSBC have been saying this for going on seven years now, so buyer beware...this is a risky proposal!

The debt's the thing

Speaking of risky investments, diversified mining and commodities trading giant Glencore has seen share prices more than halve over the past 12 months. While plunging commodities prices were the catalyst, the company's highly leveraged balance sheet is what sent shares careening down further than competitors. However, Glencore has moved quickly to shore up its capital situation and is targeting year-end 2016 net debt levels of $18bn, down from $30bn in June of last year.

While meeting this target will be quite an accomplishment, it does still leave the company with a staggering debt load. Furthermore, shares are trading at 18 times forward earnings, a level higher than the FTSE 100 at large. While the company's trading arm is very profitable, share appreciation over the medium term will still be largely dependent on an uptick in commodities prices. When prices do move upwards, I believe heavily-indebted Glencore's shares will underperform competitors such as Rio Tinto.

Telit like it is...

Unlike Glencore, Internet of Things (IoT) device maker Telit Communications has industry tailwinds at its back. The IoT market is expected be worth many billions of pounds in the coming years and Telit is well placed to take advantage of this trend. The company focuses on making the devices that connect everything from cars to refrigerators to the cloud. Shares have been dented recently due to downward revisions to 2015 growth, but full-year revenues still rose an impressive 13.4%.

The company does remain a small player in the space and is vulnerable to giant competitors exploiting their economies of scale, but with such a massive growth market to exploit I believe it shouldn't lack for opportunities. Shares trade at a low 11 times earnings, which suggests to me that Telit has the best opportunity of these three shares to double in size in the coming years.

I may believe Telit has the potential to double in size, but the Motley Fool's crack analysts have outdone me and found a company they believe has the potential to triple in size over the coming decade.

Luckily for investors, they've detailed this company in their latest free report A Top Growth Share. After growing sales every year since going public in 1997 this classic British brand isn't done yet as it is just now expanding into international markets.

To read your free, no obligation copy of this report simply follow this link.

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