Small Cap Catch Up – SPA, TIG, PFD, RNO And SNWS
1Spatial (LON:SPA) – Really Gaining Awareness
The recent £316m bid by the US-based Private Equity group Kohlberg Kravis Roberts for geospatial software peer group IQGeo (LON:IQG) has certainly highlighted the attractions of what Claire Milverton’s £82m capitalised business has to offer.
Still early days in the development and exponential growth of 1Spatial, its shares which hit 77p last Friday achieving my latest Target Price in just 21 trading days, closed last night at a still appealing 74p.
(Profile 12.05.21 @ 41.5p set a Target Price of 52.5p*)
(Profile 22.04.24 @ 58.5p set a Target Price of 75p*)
Team Internet Group (LON:TIG) – 200p An Easy Early Objective
On Wednesday last week I suggested that after the recent share price strength, it would be reasonable to expect some profit-taking.
While also noting that the ongoing push by the group’s Management continues to be impressive, which will hopefully be more properly reflected in a much higher share price.
The shares were then 158.20p, yesterday they hit 181.20p responding to a much heavier demand for stock, before closing at 180.60p.
With the current momentum I would suggest that 200p really is not that far away now.
(Profile 17.04.23 @ 123p set a Target Price of 150p*)
(Profile 18.01.24 @ 124.60p set a Target Price of 156p*)
Premier Foods (LON:PFD) – A 15% Rise In Price Due Soon
On Monday of this week the shares of one of the UK’s largest foods businesses hit 177.05p, which is a 12-year peak for the stock.
I seem to remember them trading more than ten times that price way before the market crash in 2008.
However, the group is in cracking shape right now and its shares continue to have strong appeal.
Analysts Clive Black and Darren Shirley at Shore Capital Markets have recently raised their estimates for the group, looking for current year revenues to end March 2025 of £1,169m (£1,123m) with adjusted pre-tax profits of £161.3m (£157.9m), lifting earnings to 13.7p (13.4p) and hiking its dividend up to 2.1p (1.7p) per share.
We will have to wait until the group’s Q1 Trading Update to see just how well it is performing – but this cash generative group’s shares, 174p last night, also with 200p written all over them.
(Profile 29.06.20 @ 67.5p set a Target Price of 101p*)
(Profile 01.11.23 @ 117.5p set a Target Price of 152.75p*)
Renold (LON:RNO) – An Ongoing Cycle
Within a whisker of achievement.
Yesterday the shares of this industrial chains and torque transmission products group hit 58.72p – within a mere whisper of my age-old 60p Target Price, set almost five years ago.
What has driven the recent strength in the group’s shares – surely it cannot be the news that the company has renewed its successful partnership with British Cycling for a further three years, providing bespoke bike chains for the Great Britain Cycling Team.
The renewed partnership will see over 100 bespoke chains manufactured for the British Olympic and Paralympic teams at the Paris 2024 Olympic and Paralympic Games this summer.
Since 2011 Renold and Bristol University have shared their expertise to deliver bespoke handmade chains for the GB track cyclists.
For the Rio 2016 Olympic Games, it created a specific Olympic chain, which has supported continued success on the track.
The chain evolved through to the Tokyo Games, for which an entirely new chain was unveiled, offering more efficiency than previous models.
On Wednesday 17th July the group will be looking to announce its Final Results for the year to end March 2024.
Analyst David Buxton at Cavendish Capital Markets is estimating that the company will show slightly lower revenues at £241.4m (£247.1m) but with an advance to adjusted pre-tax profits of £21.7m (£18.6m), lifting earnings to 6.6p (5.6p) per share.
For the current year he looks for £243.2m revenues, £22.7m profits, 6.8p in earnings and the introduction of a 0.4p per share dividend.
They closed last night at 56.20p, so I suggest that holders should stick firmly with their positions because my 2019 Target Price of 60p could be easily beaten within days.
(Profile 04.06.19 @ 30p set a Target Price of 60p)
(Profile 08.11.23 @ 29p set a Target Price of 36p*)
Smiths News (LON:SNWS) – Offering Even More To Deliver
At the start of this month the leading distributor of newspapers, magazines and ancillary services to retailers across the UK, announced that it had signed a refinancing agreement to replace its current senior finance agreement, which was due to mature on 31 August 2025.
Importantly the Agreement removes the existing cap on dividends and distributions, which was previously capped at £10m per financial year.
At that time CEO Jonathan Bunting stated that:
“We are extremely pleased to announce today’s refinancing news, reflecting the clear progress we have made in strengthening the Company’s underlying finances and reducing the net debt of the business.
The removal of the distribution cap also enables us to implement a revised capital allocation policy that will support our goals of investing in business capabilities, exploring inorganic adjacent market opportunities and delivering value to investors.”
Taking off the shackles will certainly help the group to show investors its attractions as an investment.
The group distributes newspapers and magazines on behalf of the major national and regional publishers, delivering daily to some 23,000 customers across England and Wales.
For a long time, the group has been enduring a low market appraisal due to its ongoing revenue declines.
Analyst Andy Murphy at Edison Investment Research has now fixed a valuation of 90p on the group’s shares, which closed last night at 64.60p.
He is estimating revenues for the year to end August of £1,070.1m (£1,091.9m) and with pre-tax profits standing still at £33.4m but generating 10.5p (11.3p) in earnings and paying a higher dividend of 5.0p (4.2p) per share.
Over at Canaccord Genuity Capital Markets analyst Mark Photiades has a Buy note out on the company with a recently increased Price Objective of 95p (85p) for the shares.
Recently they have shown a substantial uplift in price, rising from 46.73p on 8th April to a 2024 High of 66.80p – a very useful 43% gain in just six weeks.
If the group can now start to tickle itself into fresh business interests, then there may well be a balancing counter to the reducing revenues.
I still like the business, upon which I have written several times before, and continue to rate the shares as a very strong Hold.
(Profile 24.07.20 @ 20.25p set a Target Price of 27p*)
(Profile 24.06.21 @ 39.5p set a Target Price of 55p*)
(Asterisks * denote that Target Prices have been achieved since Profile publication)
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