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 Covid19 Market Recovery Portfolio + 43.5%
Established on 24 March 2020 this portfolio of just ten stocks is up 43.5% in just over three months, which compares very well with the performance of the FTSE100 Index, up 11.1% in the same period.
Medica Group (LON:MGP) – bullish mid-week update saw a pick-up in share price
This group is the UK market leader in the provision of teleradiology services.
Its trading update for the six months to end-June, announced on Wednesday of this week, was actually very positive.
Despite the massive hit to its radiology activities due to Covid-19, the group has stated that it only expects to see first-half revenues drop from £22m to £17m for the period.
The market was expecting that to be a lot lower. And the company’s cash position is so strong that it has not even taken furlough benefits for its operatives. At the end of June they had £20m cash against £16.5m at the end of December 2019.
The group’s home-reporting ability gave it an immediate operating advantage when supplying its services to the NHS and its other medical sector clients.
It is still investing quite heavily in its technical facilities for its increasing number of radiologists. It has shown its strength in quickly adapting to the changing requirements of its teleradiology service customers.
We will get a good picture of the first half and the company’s progress in H2 when it next reports in mid-September.
In the meantime, I reckon that its shares will climb gradually higher than the current 125.5p. Gresham House’s Strategic Equity Capital fund has been a steady accumulator of its shares, with a 6.17% stake. They may well have paid up to 132p for stock and would be sensible, in my view, to add further to the holding.
I remain convinced that these shares are heading higher.
Profile 07.01.20 @ 155p set an end-2020 Target Price of 215p.
DX (Group) (LON:DX.) – supporting the NHS in the delivery of Covid-19 test kits
With its shares continuing to look so much stronger over the last few days, up from 12p at the start of this month to the current 17p, items of good news are well received.
Last weekend I told you that Liberum Capital had published a 39-page research report on the company and were reckoning that the shares were headed up to 30p, they were then just 14.75p.
Yesterday the delivery group announced that it had joined a consortium of leading UK parcel delivery providers to manage the nationwide collection and delivery of COVID-19 home-testing kits.
Dealing volumes are exceeding their average daily totals.
Profile 20.02.20 @ 12p set an end 2020 Target Price of 15p *.
DWF Group (LON:DWF) – some price relief after the update
Well I really thought that I had profiled another ‘bummer’ in suggesting that investors might be able to gain an advantage from adversity when its CEO was ousted.
The legal group’s shares fell out of bed from 67p at the start of June to a low of just 45p a week ago.
So, Thursday’s trading update news was extremely welcome. The global outfit declared that it has enjoyed strong trading in the first two months of the current financial year, with both revenues and EBIDA ahead of budget and also ahead of last year.
Cost savings of £15m have been quickly implemented and that could add to the cash flow considerably. That immediately picked the shares back up 8p to the current 65.5p.
I still feel that these shares are undervalued, and my objective remains firmly in place.
It is worth noting that three of its directors were buyers of the group’s shares yesterday.
We will see just how well the group proceeds between now and 8 September when it announces its full-year results to end-April 2020.
Profile 01.06.20 @ 67p set a Target Price of 100p.
IDOX (LON:IDOX) – something happening?
The strong financial and operational performance in the first half of this current year has certainly been beneficial for the specialist information management software and solutions group.
Its shares have moved up well from my end-April profile price of 38.5p, over my price objective at 50.6p. They are ending the week at 50p and looking stronger – is another update due or is something else happening?
Profile 30.04.20 @ 38.5p set a Target Price of 50p *.
GetBusy – firmer ahead of the Mello Virtual Investor Conference tomorrow
Look out for the interim figures to end-June this year when they are announced on Thursday of next week.
This developer of document management and productivity software has over 1.6m users on its award-winning online client portals.
Its shares have already burst through my target price of 75p, now 84p, and they look capable of trading even higher very soon.
Let us see what the interims throw up.
Profile 05.05.20 @ 60p set a Target Price of 75p*.
(*denotes that target prices have previously been achieved.)