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…
The 24.03.20 CV19 Market Recovery Portfolio + 32.21%
This portfolio of 10 stocks is continuing to show an excellent performance over just two months. The FTSE100 Index is up 9.03% in the same time frame.
Capital Drilling (LON:CAPD) – Berenberg initiates coverage as a Buy
Looking for the shares to go up to 77p Berenberg, on Wednesday of this week, published an impressive 40-page research document on my favourite drilling rig company.
This leading mining services business provides a complete range of drilling and mine site services to mineral exploration and mining companies, with a focus on the African markets.
The company’s services include exploration, development, drill and blast and grade control drilling for surface and underground projects and load and haul services.
The group’s corporate headquarters are in Mauritius and it has established operations in Botswana, Burkina Faso, Côte d’Ivoire, Egypt, Mali, Mauritania, Namibia, Nigeria and Tanzania.
The brokers state that the company has “shaped its contract portfolio to gain exposure from more stable, mine site contracts, which are related to production.”
The group’s “foray into contract mining has the potential to meaningfully grow revenues.”
The AGM is due to be held on Friday 12 June in Mauritius – so I anticipate a good statement from Executive Chairman Jamie Boyton on that day.
I remain a big fan of this company. I rate its upside potential as being very strong, similar to what some 90% of its clients drill for, namely gold. And the higher the price of that metal climbs, then demand for Capital Drilling’s services will increase.
This £81.5m valued company’s shares have been gently edging higher recently and they are closing the week at around the 61.5p level – leaving at least a 15.5p climb to hit Berenberg’s target price. That offers a 25% plus gain upon attainment.
Profile 23.07.19 @ 48p set an end-2020 Target Price of 76p.
Profile 22.10.19 @ 61p set and end-2020 Target Price of 100p.
Avon Rubber (LON:AVON) – excellent set of interim figures
A much better performance at the halfway stage from the group’s dairy division, together with some good growth from its protection side helped to give the market more confidence in the stock.
Estimates for the full year to end-September 2020 suggest that revenues could rise from £179m to £230m, with pre-tax profits improving from £31.4m to £35m. That would see earnings at 93p per share, more than trebling the cover for a 27p dividend (against 20.8p last time).
It appears that this group is going from strength to strength, despite the pandemic.
This has been an excellent profile performer to date, and I see no reason for holders to sell any just yet – there is more to come from this one. The shares close the week at around the 3,075p level.
Profile 03.10.19 @ 1700p set an end-2020 Target Price of 2250p *.
Cohort (LON:CHRT) – another year of progress
The April 2020 year-end Trading Update showed this defence and security group being hit in its final two months by the Covid-19 influences.
Research estimates have been eased accordingly for the 2020 revenue to have climbed 9.3% to £132.5m, giving a 5.6% pre-tax profit increase for the year to £16.7m. That would give earnings of almost 34.5p per share, amply covering a 10p dividend.
The current year could see £137.5m of sales and £17.5m pre-tax, worth 35.5p in earnings and an 11p dividend per share.
I rate this group as a key player in its sector and I still consider that it is a likely foreign takeover candidate.
Its shares at 523p have renewed appeal.
Profile 06.08.19 @ 446p set an end-2020 Target Price of 607p *.
The MISSION Group (LON:TMG) – perking up again
This marketing communications group gave out a Covid19 Update yesterday. It noted that it had reacted quickly to the virus impact, with its day-to-day operations having been disrupted minimally.
It is already seeing some early signs of increased activity in certain of the sectors that it services, especially technology, healthcare and property.
Overall, the group is encouraged with the group’s response to the virus and, despite the short-term challenges, it feels confident that it is well placed to benefit once the economic recovery gains real momentum.
I hope for an uplifting AGM statement on 15 June and was happy with the Update and the improved share price of 57.9p offers more recovery upside.
Profile 04.02.20 @ 88.5p set an end-2020 Target Price of 125p.
Totally (LON:TLY) – shares have doubled in just two months
I have to say that I have been extremely pleased with the performance of the shares of this leading provider of a range of healthcare services since I profiled the company in the second week of March this year.
I also have absolutely no doubt that the end-March 2020 full-year figures will be very good when they are announced in July.
Now at 24p, the company’s shares are looking strong, and as keen as I am on the company and its scope to expand, I would hold back from chasing them too much higher until news changes my view.
Profile 12.03.20 @ 12p set an end 2020 Target Price of 18p *.
(* denotes that Target Prices have previously been achieved.)