Small cap round up featuring MPAC, Equals, Angling Direct and more… 

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Small cap round up featuring MPAC, Equals, Angling Direct and more… 
Master Investor Magazine

Master Investor Magazine Issue 59

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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…

MPAC Group (LON:MPAC) – truly excellent performance so far

The shares of this processing and packaging equipment group have been a stunning performer since I profiled them a week before last Christmas.

They touched 375p on Thursday morning, that is more than double my profile price just seven weeks ago.

The shares close the week at around the 365p level, after falling to 340p on Friday morning.

The re-rating rise has been fairly rapid, and it would not be at all surprising if the process took a bit of a breather before the finals are announced on 4 March.

Profile 19.12.19 @ 182p set an end-2020 Target Price of 235p.

Equals Group (LON:EQLS) – depressing statement or badly worded?

The reaction to the latest corporate statement from this financial services, banking, payments, and foreign exchange group has not been favourable.

The shares, which had been up to 132p since I profiled them this time last year, are now at 43p and have been in almost free fall.

But is this reaction right?

On the face of it I feel that it has been far too negative.

Over the last few years this group has been expanding its range of services and the depth of its operations, and it has been prepared to invest in its future. As such the company states clearly that it expects to see growth in current-year revenues and profits, as well as cash generation.

Trading in January was encouraging, so let us hope that by the time of its finals being published in April that greater strength will be forthcoming in 2020.

Unless I am very wrong, these shares are for buying, not for dumping.

Profile 14.02.19 @ 89p with no set TP; however I now set an end-2020 Target Price at 100p.

Angling Direct (LON:ANG) – ready to hook in even bigger sales this year

On or around Tuesday 18 February this fishing tackle and goods retailer could well be announcing its second-half trading update.

And boy what a year the group has had. It is up to 34 stores now and is still expanding at quite a pace.

Sales in the year to end-January are estimated to have risen 30% to some £54.8m, while the trading loss may be 50% worse at £0.4m which is quite acceptable due to the store openings and refurbishment costs.

The current year could see sales rise at least 20% to £66m, with a £0.3m pre-tax profit being hooked in for the year.

The shares at 68.5p appear ready for another move forward, but whether they can get back up to the 114p of this time in 2018 is perhaps asking too much too soon. Even so, they still have some real upside and my target remains intact.

Profile 29.10.19 @ 58p set an end-2020 Target Price of 100p.

Belvoir Group (LON:BLV) – up 29% in one month!

What a fabulous spurt the shares of this nationwide lettings agency have put on since their end-January pre-close trading update.

Some 23 years of unbroken profit growth deserves a premium rating for its shares, but as yet that has not been accorded to the company.

The year to end-December 2019 indications are that the company, the UK’s largest property franchise group, has seen a 43% jump in revenue to £19.5m with pre-tax profits expected to be comfortably ahead of market estimates.

I just love this stock. It all adds up to a very healthy constituent for any portfolio.

We will see just how good the finals are when the company reports on 30 March.

The shares, now at 181p, have shown an impressive 29% appreciation in price since my early January article – and there is still more to come.

Profile 09.01.20 @ 141p set an end-2020 target price of 175p.

Frontier Developments (LON:FDEV) – going higher yet

I wouldn’t worry about the ‘lumpy’ performance in the interim sales and profits figures of this games developer and publisher.

Its latest offering, Planet Zoo, sold over 500,000 units within weeks of its launch last November and all of the group’s titles are continuing to sell well.

Yes, they earn a big chunk in dollars and the foreign exchange markets have not been in their favour but that is short term.

The group’s shares fell from a recent high of 1,452p on Tuesday ahead of the Interims being announced the next day.

They subsequently fell away to 1,264p on Wednesday, before staging a price recovery to 1,426p on Thursday – showing a tidy profit for those with nimble wallets. They close the week at 1,417p – still up 21% in just over three months.

This group is a real generator and the next titles are well advanced for 2021 and 2022.

Master Investor Magazine

Master Investor Magazine Issue 59

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Revenues for the current year will be around £70m and its operating profits will be in line with expectations.

My target could well be breached within weeks. If they stay too low the group would be well open to a predator from within the games sector.

Profile 01.10.19 at 1,000p set an end-2020 Target Price of 1,500p.

Strix Group (LON:KETL) – added broker strength

Ahead of the final results being announced in the middle of March, I was pleased to see that this kettle safety controls group had appointed another broker, Stifel Nicolaus Europe, to join with Zeus Capital in representing the company.

I rate this company highly and consider that its international potential is massive and that will show through in this current trading year, although the 2019 figures may be about 7% lower than 2018’s £24m profits. 2020 could see sales of £105m and pre-tax profits of £32m.

These shares, closing the week at 186p, are looking undervalued.

Profile 31.12.19 @ 196p set an end-2020 Target Price of 250p.

OnTheMarket (LON:OTMP) – looking for a bullish trading update

This property portal operator saw over 30m visits in January, a new record for this relative newcomer to the marketplace, which is dominated by Rightmove and Zoopla.

Last month it sent over 140m instant property alerts to its property-seeking portal users.

The company, which was over 70% owned by some 2,000 agent firms when it floated two years ago, now has over 3,000 agents covering over 6,000 branches as its shareholders.

Its shares, now at 78.75p, have yet to perform as I had hoped when I first profiled the company four months ago – but there is still plenty of time for them to make a strong advance in price.

They touched a 65p low after my article, so the gradual advance since then could well be a good pointer.

I anticipate a bullish Trading Update for its final figures when it gets announced in early April.

Profile 24.09.19 @ 96.5p set an end-2020 Target Price of 175p.

And finally…

Petards Group (LON:PEG) – how wrong I was!

This week’s trading update for its 2019 finals shows that this advanced security and surveillance systems group has moved into losses.

Understandably, its shares have collapsed to just 9p and growth company investors should now take a loss on this tiddler.

That is just what MI Downing UK MicroCap Growth Fund have done this week, reducing their holding by nearly 30% to just 4.14% of the equity.

However, recognising the shrewdness of a number of its investors and connections, I still consider that a bid for the company is a strong possibility.

Profile 18.04.19 @ 22p set an end-2020 Target Price of 40p.

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