Mytrah Energy Ltd (MYT)
Should You Buy Mytrah Energy Ltd Instead Of Anglo American plc And Dragon Oil plc?
Shares in Indian wind power specialist Mytrah Energy (LSE:MYT) have surged by as much as 14% today after the company released upbeat results for 2014. In fact, underlying profit before tax rose by 10% to $11m, with a greater operating capacity being a major reason for this. And, looking ahead, additional capacity from new projects is set to cause Mytrah Energy's bottom line to deliver further growth, with more projects in the pipeline.
Of course, wind power is set to be a growth area both in the developed world and in emerging markets, with a greater focus on efficiency and a carbon neutral global economy set to lie ahead. As such, Mytrah Energy clearly has a product for which demand will grow and, as such, its long term prospects appear to be bright. That's especially the case since its operating portfolio generates sufficient cash flow to support continued growth in its capacity each year.
However, there are a number of opportunities elsewhere - notably in the mining and oil sectors. Certainly, they may be less advanced in terms of their effects on the environment being relatively harmful, but with the prices of various commodities falling in recent months, the valuations of companies such as Dragon Oil (LSE:DGO) and Anglo American (LSE:AAL) offer tremendous appeal.
For example, Dragon Oil trades on a price to book (P/B) ratio of just 1.4 and this shows that, even if there are write downs to the company's asset base over the medium term, its current valuation appears to take this into account. Meanwhile, Anglo American has a P/B ratio of just 0.7, which indicates that there is a tremendous margin of safety and that the company's share price could head northwards at a rapid rate over the medium to long term.
While there is clearly significant growth potential in wind power across India and the emerging world, Anglo American and Dragon Oil also offer superb growth prospects. For example, Dragon Oil is forecast to increase its earnings per share by a hugely impressive 42% next year. That's around seven times the growth rate of the wider index and, despite this, it has a price to earnings (P/E) ratio of just 14.9 - less than the FTSE 100's P/E ratio of 16.
And, it's a similar story with Anglo American, with it being expected to increase its bottom line by 32% next year, with its rating of 13.4 having significant expansion potential.
So, while Mytrah has performed well and is well-positioned to successfully tap into the growing demand for wind power in India, there are fantastic opportunities elsewhere - notably with Dragon Oil and Anglo American. And, with both of those companies being bigger and arguably having more financial firepower, they could prove to be less risky than Mytrah Energy, while their low valuations and excellent growth prospects indicate that the reward on offer to their investors is very substantial. As such, Anglo American and Dragon Oil remain preferred choices to Mytrah Energy, although the latter is certainly one to watch.
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.