Small-cap round-up featuring CMC Markets, Medica, N Brown and more…

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Small-cap round-up featuring CMC Markets, Medica, N Brown and more…

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…

CMC Markets (LON:CMCX) – Third-quarter trading update next week

In the middle of last November this online financial trading group announced a very positive set of interim results for the six months to end-September.

They showed record trading performances across its global spread – it has operations not only in the UK but also in eleven other countries including Australia, Singapore and Germany.

Just imagine what business they must have been enjoying over the run-up to Brexit, as well the US Elections.

So next week’s Q3 trading update, in my view, can only be very much more positive. They are due to be announced on Thursday 21 January.

The group’s shares, now 421p, have risen 350% since my first profile fifteen months ago, do I think that they will rise even higher?

Oh yes most certainly – although they could easily fall back to 350p or thereabouts upon any bad market news, I still consider that they will push upwards in recovery.

(Profile 17.10.19 @ 120p set a Target Price of 180p*)

Medica Group (LON:MGP) – Irish benefits yet?

Have you noticed the recent creeping forward of the share price of this expanding group? 

The company is the UK’s leading provider of teleradiology services to both the NHS and the private health sector.

Its recent £14.5m acquisition, of a very similar operation in Ireland, is considered to be a truly excellent fit, especially as it is ‘strongly earnings enhancing’ – what is more it really does help to compound its market leadership in its sector.

Last year the group announced a pre-close trading update on 23 January, although no date has as yet been given to the market, as far as I can see, will it declare similarly this year?

The shares edging higher, perhaps, gives us a clue – there is always someone in the market who knows more than others.

Of late, Aberforth Partners have been adding to their holding in the group, 14.34% at the last call. Gresham House Asset Management held an increased 10.32% when last declared.

In the last year the group’s shares have been up to 160p and as low as 88p – now at 130p – their rise from 111p a month ago, indicates building market interest.

Is it just nosey speculative buying ahead of a trading update in the next week or so?

I really like this business and its potential. However, I have been very disappointed at the performance of its shares since I profiled the company a year ago.

We shall just have to wait and see what is going to happen. I am not altering my target price.

(Profile 07.01.20 @ 155p set a Target Price of 215p)

Luceco (LON:LUCE) – Fourth-quarter trading update next week

Thursday 21 January is the date fixed for this company to declare its Q4 trading update, for its year ended on 31 December.

Currently operating on a gross margin of over 41%, this company is both a manufacturer and distributor of high quality and innovative wiring accessories, LED lighting and portable power products for a global customer base.

It supplies trade distributors, retailers, wholesalers and project developers. 

We already know that the Q3 performance was ahead of expectations, and that Q4 had started well.

The group has given guidance that its 2020 adjusted operating profit was going to be better than its previous estimate of £23m – with £28m to £30m being the new range.

A month ago, the group’s shares were trading at 230p, and they closed the last week at 287p.

Does that price rise suggest the market is looking for more than the company’s guidance?

Having nearly trebled since my mid-year profile, I have obviously been pleased with their performance, but until more is known I would not suggest chasing the shares at these levels.

(Profile 15.06.20 @ 96.1p set a Target Price of 125p*)

N Brown Group (LON:BWNG) – Cash to hand and restructuring underway

The November placing and open offer by this group was very successful, raising just over £100m @ 57p per share. That was announced at the same time as the group declared a 25% first-half profit drop, with the balance sheet needing some shoring up.

The strategic transformation of the clothing and footwear digital retail group is ongoing but, now with fresh funding, combined with cost base efficiencies, perhaps we can anticipate better times ahead. 

The recent newcomer to AIM, down from its main market listing, is due to announce its Q3 trading statement this Friday.

The group’s shares, which traded at almost 600p a share seven years ago, have been down to 9.1p each by the end of March last year – last Friday night they closed the week at 69.2p.

This week’s announcement should make interesting reading. I remain positive.

(Profile 06.07.20 @ 36.15p set a Target Price of 50p*)

The Gym Group (LON:GYM) –  H2 trading update due this coming Friday

Wow – what an experience this group must have endured over the last nine months or so.

The pre-close trading update is due to be published at the end of this week.

It will probably describe how it has endured the opening, closing, then opening and closing again of its 183 low-cost gyms during the pandemic period.

It confirmed the extension of its banking facilities by £30m in the third week of December – now with a £100m facility.

Over 325p a year ago, the group’s shares have been down to just 75p at their worst. Now at 213.75p their subsequent recovery has been notable. However, I do feel that it will take a long time for my price objective to be repeated – these shares are not for chasing.

(Profile 11.04.19 @ 220p set a Target Price of 300p*)

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