In this weekly summary, Mark Watson-Mitchell updates his readers on previous company profiles and other news of interest from the exciting world of small cap stocks…
N Brown Group (LON:BWNG) – two big buyers moving on the stock
On Friday of last week Schroders went above the 5% declarable level, taking their holding in this emerging online retailer to 5.927%. On the same day Norges Bank of Norway took a stake of 2.99% in the company, together with a 1.05% indirect stake – totalling 4.04% of Brown’s 285m shares.
Both of those holdings were probably acquired in the 35p/36p price range.
Last night the shares closed up 10.5% at 41.86p, moving closer to my price objective.
I see further upward movement ahead of the 10 September AGM.
And, more importantly, I am glad to see that Evil is a buyer (see his notes as of yesterday).
Profile 06.07.20 @ 36.15p set a Target Price of 50p.
Begbies Traynor (LON:BEG) – so much corporate distress coming
Yesterday’s results from this insolvency and business recovery group were very much as anticipated by the market, even so I still rate the shares as being undervalued at around 98.4p, up 3% on the day.
Revenues were up from £60.1m to £70.1m, while adjusted pre-tax profits rose from £7m to £9.2m, earnings increased from 4.8p to 5.7p and the dividend was up to 2.8p per share.
Increased activity all around the group gives investors confidence in current and future years.
We will get a further update on the current year at the AGM in mid-September.
In the meantime, Shore Capital is showing the shares as a ‘buy’ so I look for them to move gently better and certainly over the magic 100p price line.
I am going for 120p/125p before the year is out.
Profile 26.11.19 @ 85p set a Target Price of 110p*.
Profile 21.04.20 @ 93p set a Target Price of 110p*.
Medica Group (LON:MGP) – Gresham’s Strategic Capital still buyers
Medica is the UK market leader in the provision of teleradiology services, providing outsourced interpretation and reporting on MRI, CT and plain film (x-ray) images.
It has the largest pool of consultant radiologists outside of the NHS to whom it is a major outsource service supplier.
The group’s interim results are due to be announced on 14 September by which time I expect that its shares will be a great deal higher than the prices that Gresham’s Strategic Capital Fund paid last week when it added to its holdings.
The fund upped its stake from 6.17% to 7.23% of the 111.3m shares in issue in the last week.
The shares closed last night at 133p, still some way below my original profile price, which leaves a lot of upside potential as they inevitably reduce the price gap.
Please don’t underestimate this group, it is a one-off in the market and deserves to be considerably higher in price.
Gresham knows a good strategic purchase when it sees one.
Profile 07.01.20 @ 155p set a Target Price of 215p.
TClarke (LON:CTO) – looking for recovery
I have to say that I was disappointed by yesterday’s interim results from this building services group.
Despite an impressive order book of £402m as at the end of June, up from £370m, and an increase of 108% to £7.5m in net cash for the first half, the underlying pre-tax profit was down from £4.6m to just £1.7m. Revenues reflected the Covid-19 pressures falling from £171.3m to just £106.1m for the period.
Brokers Cenkos Securities rate the group’s shares, off 5% yesterday to 93p, as a buy, on a recovery basis alone. That is a safe bet – that it will show recovery, after all it has suffered many ups and downs in its sector and the market generally. It has solid history of real experience and the way that it acted so quickly upon the impact of the virus was impressive.
It has reduced its operating costs, while conserving its cash balances and facilities.
I was hoping for better results than those reported yesterday, even so I do think that Cenkos are thinking along the right lines.
Profile 10.12.19 @ 120p set a Target Price of 165p.
CMC Markets (LON:CMCX) – having trebled profit-taking is understandable
Following the price rise after the recent first-quarter trading update it is quite understandable that Aberforth have taken advantage and sold off a few, taking its holding down almost 20% to just 5% of the equity.
The shares closed off 11p last night at 353.5p. They may well fall back quite a bit more in such profit-taking – after all, it has trebled since my first profile piece.
But it still remains an excellent counter-cyclical play for any active portfolio.
Profile 17.10.19 @ 120p set a Target Price of 180p*.
(*denotes that the Target Prices have been previously attained.)