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 (LON:BWNG) – fund manager getting very keen
Well now we know just how keen Schroder Investment Management is on this clothing retail and online operator.
On Monday of this week the fund managers ramped their holding up to 28.29m shares, representing an almost doubling of their 16.94m holding declared two weeks ago.
The group’s AGM is due to be held in a month’s time on Thursday 10 September.
After hitting 42p a couple of weeks ago, the shares close the week at 36p.
(Profile 06.07.20 @ 36.15p set a Target Price of 50p.)
Premier Foods (LON:PFD) – AGM next week
I am looking for yet another positive statement from Alex Whitehouse, boss of this leading national food brands group, when it holds its AGM on Wednesday of next week.
The first quarter statement showed sales up 22.5% for the 13 weeks to 27 June.
Sensibly, the company does not expect that rate of growth to continue in the second quarter. Even so, the full year should be good.
The shares, which are currently trading at around the 85p level, look very capable of an early push above the 100p mark.
(Profile 29.06.20 @ 67.5p set a Target Price of 101p.)
Alumasc (LON:ALU) – the ‘insiders’ are buyers
Have you noticed the ‘insiders’ buying more stock in this premium building products group?
Five of its directors have been paying between 69p and 72p to add to their holdings within the narrow dealing period before the next corporate statement.
That should be the company’s finals due to be declared in September.
A fortnight ago, its trading update for the year to end June stated that the year ended with improved trading. Just a 16% fall in revenues at some £76m was mentioned – not so bad considering the Covid-19 impact.
The shares have been improving gently over the week and are currently 73.5p. I remain very bullish.
(Profile 08.06.20 @ 80p set a Target Price of 105p.)
Augean (LON:AUG) – on the move up
We are just over a month away from this UK based leading specialist waste management group reporting its interim results – Monday 21 September.
I am still waiting for and hoping for the company to win through with its claim against HMRC for repayment of the Landfill Tax. Other waste companies are fighting too.
The shares, which were just 184p this time a week ago, have moved better over the last week to around 197.5p, with mounting deals at that price.
My confidence in the shares picking up another 18% stays firmly intact.
(Profile 31.10.19 @ 158.5p set a Target Price of 200p*.)
(Profile 10.06.20 @ 185p set a Target Price of 235p.)
D4T4 Solutions (LON:D4T4) – good AGM statement
Software and computer services specialist issued a positive update at its AGM yesterday.
Despite the virus it is trading in line with expectations and is experiencing very good levels of existing and new client business.
And what I love about this group is that its transition to an annual recurring revenue model is speeding up. ARR is so important and it is a base upon which this group can build.
Although its shares look expensive at 233.5p, trading at 35 times current year earnings, its brokers, finnCap, are still looking for them to hit 310p.
(Profile 09.04.20 @ 170p set a Target Price of 215p*.)
Capita (LON:CPI) – good interim statement hoped for shortly
Fund managers RWC Asset Management have made a good call, in my view, in adding to their holding in this multi-service group.
They now hold 253m shares in the company, taking the holding up to 15.16%.
A number of subsidiary disposals are in progress, with the legal services division going for £56m, while a £400m plus sale of its education software interests is being sought. Well, that would significantly reduce group debt, now around £750m.
Perhaps the end-June interim results announcement due shortly will help create more interest in the shares.
Yes, that debt does create investor risks until disposals are completed. However, I do feel that the shares at just 35.9p do have significant upside potential.
(Profile 01.07.20 @ 44p set a Target Price of 66p.)
Morgan Sindall (LON:MGS) – is it time to buy again?
The first-half results showed that this construction and regeneration group was hit hard by the pandemic’s effects.
Revenues for the half-year to end-June fell to £1.36bn and pre-tax profits were off some 62% at £13.6m, slicing its earnings similarly to just 23.7p per share.
However, with nearly all of its operations back at work again, hopes are that profits will come in at around £52.5m for the year (£88.6m). Revenues could be around £2.7bn (£3.1bn).
Earnings are estimated to fall from 161.2p to just 91.82p per share for the full year.
Already brokers are looking for a further recovery next year, with £2.9bn of sales and £81m pre-tax, worth 141p in earnings.
As the order book currently stands at an impressive £7.96bn, such estimates look to be well backed.
Brokers Liberum Capital suggest that the shares, trading on just over 7 times next year’s earnings, are ‘too cheap’. They upgraded their ‘hold’ to a ‘buy’ and are now looking for £13 for the shares, which have already jumped 25% this week to £12.44.
(Profile 14.05.19 @ £13 set a Target Price of £16*.)