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That said, we aren't betting on Highland outperforming over the long run. Instead we are looking for above-average gains over the next six months as the shares re-rate to a more sensible earnings multiple. A boost to the gold price from further rounds of QE would certainly help since junior gold equities are highly leveraged to the price of the yellow metal. But even without this, Highland Gold's shares are simply too lowly rated, priced 20 per cent below book value and on a miserly five times 2012 earnings estimates

Admittedly, Highland's main MNV gold mine - which produced 144,000 ounces last year or 78 per cent of the company's gold output - is scheduled to wind down in 2016 unless Highland can extend the mine life. To that end, the company is currently completing surface drilling in areas around the open pit. It is also advancing a number of near-term development projects to fill in the eventual loss of production. For example, construction of a processing plant at its Belaya Gora mine will complete by the year-end and recently acquired LLC Klen, a Russian company that controls the Klen gold deposit, should start production in 2015. True, Highland's shares could see further selling if the company misses production targets again or political issues in Russia flare up. But Highland's financial backers are very well connected - the largest minority shareholder is Chelsea football club billionaire owner Roman Abramovich. And it's worth noting that Barrick's decision to exit its investment was mainly because the major miner is ridding itself of non-core assets. Barrick actually acquired its initial position in Highland in 2003.

Yet Highland remains in solid financial and operational shape. The company has a cash-rich balance sheet, no gold hedges and plans to ramp up production to between 200,000 and 215,000 ounces in 2012. A strong pipeline of projects in prospective growth areas of Russia and the CIS adds to the attraction.

Indeed, the past two rounds of global money printing have helped push gold from around $750 an ounce in late 2008 to a peak of just over $1,900 an ounce last September. During this time, many gold mining equities performed strongly - and as the chart below shows, shares of highly leveraged gold producers such as Highland even outperformed the rising price of bullion at times. Yet there has been a reversal of this trend this year. While the price of gold has actually risen slightly in 2012, shares of junior gold miners and risky resource stocks have come under extreme selling pressure, with the global economy - and thus demand for commodities - cooling once more. Certainly, shares in Highland have fallen by more than most. The departure in February of strategic investor Barrick Gold - the world's largest gold miner and a widely-touted potential bidder for Highland - sent the shares tumbling. Then, in April, the company announced it had missed production targets as a result of deteriorating ore grades and weather-related delays. However, having halved in value since January, the oversold shares appear to be in the early stages of recovering some of that lost ground. They are certainly cheap enough, trading at a hefty discount to book value and, at 5.3 times trailing 12-month earnings, have the lowest PE ratio of their peer group.

When it comes to mining, margins are king. And today, with the price of gold hovering at nearly $1,600 (£1,030) an ounce, the margins on gold mining have rarely been this good. True, costs are on the rise, but some producers - such as Russia-focused Highland Gold - have managed to contain them better than others and are now reaping huge benefits. Highland produced 184,000 ounces of gold last year from its three mines in eastern Russia at cash operating costs of just $594 an ounce - below the $657 an ounce averaged by two dozen of the world's largest gold miners - resulting in a healthy gross profit margin of over 50 per cent. And while costs for 2012 are expected to rise slightly, so too might the price of gold. Another round of quantitative easing (QE) by the US central bank is looking increasingly likely later in the year and that would be seriously good news for gold, which acts as a traditional hedge against inflation and mitigates the risk of fiat currencies being debased by money printing.

Galliford Try is plotting a path with the emphasis on steady and sustainable progress. Its plan to be selective about the construction projects it pursues and concentrating housebuilding in England's south east are key elements. Admittedly, the share price has started to reflect this progress - up 32 per cent since the start of the year. Even so, the shares trade at little more than book value, are rated at just nine times forecast earnings and offer a nice dividend yield on a payout twice covered by earnings. What more could a valuable investors like us want?...........good luck

The group also has a modest portfolio of public-private investments, which generated operating profits of £1.1m in the first half. But there is very little activity in England as a result of a government review into this model of capital spending, although significant projects are still being pursued in Scotland. Galliford's success means its three-year growth plan set out in 2009 has been achieved and in parts beaten, and the next stage is now in hand. This includes increasing gross margins on housebuilding by three percentage points by 2015 through productivity gains. This could be important because analysts at broker Peel Hunt calculate a fair value for Galliford of 825p a share. If, however, the targeted margin growth is delivered, that would boost their value calculation to 925p a share, far above the current share price. Group finances are in pretty good shape, too. Thanks to solid cash generation, Galliford turned net debt of £70m in December into £20m of net cash by June. It has also reduced its upfront expenses by securing more land on deferred terms. And it has in place a £325m borrowing facility that runs until 2015.

Simultaneously, management has been improving the quality of the group's land bank, with 81 per cent of its 10,500 plots bought at current market values. Furthermore, all the plots for construction in the year just begun have been secured, as have 87 per cent earmarked for construction in 2013-14. And Galliford is operating chiefly in the south east of the country, where 75 per cent of its land bank is located and the economy is relatively resilient. All this has helped profit margins on housebuilding, which jumped from 6.5 per cent in the first half of 2010-11 to 11 per cent in the first half of 2011-12. In addition, profits from land sales boosted margins to 12.6 per cent.

Part of the success in maintaining the order book comes from having a diverse revenue stream, with around 44 per cent of work coming from regulated sector - such as gas, water supply and water treatment - another 43 per cent from the public sector and the remainder from the private sector. Still, management has to remain selective in taking on new work simply to maintain profit margins which, on the construction side, are lean - in the first half of 2011-12 they were 2.2 per cent, down from 2.5 per cent a year earlier. In housebuilding, Galliford completed 3,039 units in 2011-12 - that's a record, and 40 per cent more than the year before. The average selling price for private homes was £250,000, up 10 per cent on the year, and the value of housing sales carried forward was up 11 per cent at £273m

Galliford Try has a housebuilding operation that, like other large housebuilders, has benefited from a combination of cheaper land and pent-up demand for new homes. What's equally impressive is the way its construction side has held up so well. That's because the construction industry is in a vicious downward spiral, with companies chasing a dwindling pot of new work, resulting in a tightening squeeze on profits. True, there are some big plans to boost spending on the UK's infrastructure, but these will take time to come to fruition. So it's impressive for Galliford to maintain its construction order book at £1.6bn; that includes some major contracts, such as the £347m Gateshead regeneration programme and a £180m scheme to upgrade and extend Liverpool's waste water treatment works. In fact, 82 per cent of projected revenue for the year to June 2013 has already been secured, a rise from 80 per cent this time last year.

Renew has diversified away from heavy construction to more stable engineering services work, yet the shares don't reflect this, trading on just seven times N+1 Brewin's forecast EPS for 2012-13; add in the strong order book and record results,

Previously, Renew had been more exposed to the vagaries of the construction market, and further downturn there could still hurt as construction was responsible for 42 per cent of group revenue and 18 per cent of operating profits in the half year to 31 March. But it is the growth of the engineering services division that makes Renew an exciting prospect. True, the order book is down from £334m in March 2011 to £304m in March 2012 as construction demand eases, but underneath the headline figure much has changed - 75 per cent of orders are for higher-margin engineering services, up from 49 per cent a year ago. Renew's performance should also become less volatile, with 83 per cent of engineering work coming from regulated sectors, such as water, railways and nuclear power. Operating profits in the first half more than doubled from £2.2m to £4.7m, and the operating margin improved from 1.4 to 2.5 per cent. Chief executive Brian May thinks the company is well on the way to delivering a profit margin of over 3 per cent. The dividend is moving in the right direction, too. After being stuck for three years at 3p, a 5 per cent rise in this year's half-year payout indicates management's confidence.

Renew has transformed itself into a specialist engineering support group following last year's acquisition of Amco, but investors haven't noticed and the share price doesn't reflect the bulging pipeline of work or the revitalised profit margins. But later this year the shares will be shifted into the London market's 'support services' sector and, helped by a strong first half that saw record results, that could be the catalyst for a re-rating. The £15m deal for Amco in February 2011 looks a smart move. It brought national coverage and, perhaps more importantly, highly profitable engineering support work, with clients such as Network Rail, British Energy and National Grid. Engineering services work is also stable as it comes through framework agreements whereby Renew is effectively on its clients' payroll, doing small-ticket items, such as clearing sewage blockages or re-laying cables on projects for Network Rail and London Underground. These contracts give Renew predictable revenues and the company now has 75 framework deals, up a fifth in the first half of the current year, with 62 in the engineering services sector. Also, as flooding hits the UK, this increases the chances of more spending on flood defences from the Environment Agency, another client of Renew. The Amco deal increased some risks by raising net debt to £10.3m by March 2011, but strong cash flow saw this fall to £6.9m by the end of this March; broker WH Ireland reckons the figure will fall to £3.3m by the end of September, so the deal has almost paid for itself.

Trading on seven times 2012's forecast earnings and far below net asset value (see table), Valiant's shares look too lowly rated given the company's production profile. And, as the downside from drilling failures looks priced in, Valiant's shares have become a low-risk play on oil prices and a recovery in junior resources shares. A boost from further QE would be welcome, but even without this we can see the shares re-rating as production ramps up at Causeway.

But that's why Valiant is bringing the lower-cost Causeway field online towards the end of this year, which is expected to add about 5,200 barrels to daily production in 2013. Valiant targets total daily production of between 7,000 and 8,500 barrels in 2012, although Jefferies assumes 7,100 barrels in its forecasts. Yet Valiant must also find new oil to satisfy shareholders. A lack of new discoveries in the first half - five wells, zero commercial discoveries - means shareholders must wait until early 2013 for the next well to be drilled. Fortunately, that well, Handcross, represents a larger net target than the previous five wells combined at 180m barrels of oil. Located in the West of Shetlands area, Valiant holds up to a 90 per cent working interest in the deepwater block, where chances of drilling success are put at around one in three.

True, oil prices could slide further as the global economy stays depressed. But the worse things get, the more likely QE becomes. And, unusually for a small oil producer, Valiant is exposed to minimal financial risk - and not just because it has hedged 30 per cent of its oil production above current prices. The company should be able to fund the vast majority - if not all - of its exploration and development spending in 2012 using cash flow from operations. Just in case it can't, it has at least $250m in debt facilities at its disposal. Valiant's marginal cost of production is also reasonably low - broker Jefferies forecasts $19.50 per barrel for 2012. With the price of Brent crude hovering around $103 a barrel, there's plenty of money to be made by Valiant. Its minority interests in the Don fields, operated by EnQuest, produced an average of 7,453 barrels of oil per day net to the company last year and are currently the source of all Valiant's production. Admittedly, this leaves the company uncomfortably exposed to production problems should they occur. The natural decline of North-Sea production also means output will drop slig

Falling oil prices and a series of exploration disappointments have left the share price of North Sea oil producer Valiant Petroleum reeling. Despite being underpinned by the company's solid production and having its assets in a safe jurisdiction, the shares now trade at 30 per cent below their book value. Yet Valiant has strong cash flow and new production coming on line in the second half of the year, so we think the shares will be re-rated. Besides, central banks are once more turning to creating money - so-called quantitative easing (QE) - to stimulate their countries' stagnating economies. Riskier assets - such as oil and small-cap resource shares - often grab the big gains during the stock market rallies that follow these rounds of stimuli, and we see another rally on the horizon. Certainly, Valiant is more sensitive to oil-price changes than most exploration and production companies due to its small size and fixed cost base. In 2011, for example, its average realised oil price rose 38 per cent compared with 2010, while its net oil production grew around 6 per cent. Nevertheless, revenue soared nearly 80 per cent year on year and pre-tax profit rose 150 per cent.

Cyprotex's shareholders must be willing to stay for the long haul and the company's small market capitalisation indicates that expansion is needed, which could be paid for by diluting existing interests. On the other hand, Cyprotex already makes profits, which look set to grow fast in the coming years - Singer's analysts reckon that earnings growth will compound at over 14 per cent a year in the six years to 2016. They also think that the company's 'intrinsic' value is 13p per share. That sounds attractive enough.

Diversification is also important if Cyprotex is to prosper and management has broadened the customer base so that Cyprotex's largest customers now makes up just 13 per cent of sales, compared with 34 per cent a few years ago. The expansion into the US, via the acquisition of Apredica, looks sound move as the country is the world's largest market for pharmaceutical outsourcing by some distance. The company now generates 44 per cent of its sales in the US, up from 29 per cent four years ago. Boosting sales in emerging markets is likely to be the next move, although analysts expect that Cyprotex will go for partnerships, rather than building up an in-house operation. The obvious exit for shareholders will probably be a buyout or a merger with a similar-sized company. Specialist companies in this area are fairly close knit; Cyprotex has a research partnership with Chantest Corporation, while others, such as Fluofarma, have important contracts with big companies, according to Singer Capital's research.

This trend means that contract research providers are a fast-growing part of the pharmaceuticals industry. Broker Singer Capital Markets reckons that Cyprotex's sales will grow at over 13 per cent for the next few years, while the rest of the pharma industry will grow at between 3 and 4 per cent. That growth will come, in part, from Cyprotex adding new tests to its existing service, such as its recent expansion into genomic testing, which assesses the impact of enzymes on new products.