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…
Westminster Group (LON:WSG) – beginning to gear up in price
Over the last week the shares of this supplier of managed services and technology-based security solutions have started to show some life.
Less than a year ago they were trading at 13p, since when they have eased back to 3.9p by the end of last month.
This week we have seen a lot more dealing action in the ‘penny stock’, with turnover rising to over 4m shares a day by mid-week.
In reaction, the shares have edged better to close the week at around the 4.35p level.
I would expect the group to announce its 2020 finals later this month.
Analyst Andrew Simms at brokers Arden Partners rates the shares as a ‘buy’ looking for them to rise to 19p each.
He is estimating that last year the group will have seen sales rise from £10.9m to £11.7m with pre-tax losses of around £0.7m (£0.8m).
However, for the current year he is confidently looking for £16.7m of revenues and a handsome £1.5m of adjusted pre-tax profits, worth 0.5p in earnings per share.
Way back in 2014 the group’s shares were as high as 92.5p, but they fell back to just 6p within two years, before rising rapidly in the summer of 2016 to 31.5p. After collapsing back to 8.75p a year later, the shares then went close to 28p by the beginning of 2018.
Then by March of last year the shares were back down to around 4p before trebling by the beginning of last June.
So yes, they have been a bit of a switchback ride for investors over the last few years. That can prove to be immensely profitable for ‘penny stock traders’ who are swift of foot.
But the group is a different being now and its management is set on a growth strategy.
I can understand such a price objective of 19p as not at all being outlandish. Even so, I would be much more cautious.
My price objective remains steady at 6p, against the shares now trading at 4.35p, and what is more I am confident that it will be achieved within months. There is still plenty of time to get in and build up a stake.
(Profile 17.03.21 @ 4.2p set a Target Price of 6p)
Eqtec (LON:EQT) – waste-to-energy solutions group accumulating orders
I note that research house Align Research has this week put out a note on this little technology solutions group.
Less than a month ago the company issued its trading update that indicated profitability in this year.
Claiming it to be the world’s leading expert in gasification for sustainable waste-to-energy projects, it could well be turning in maiden profits this year and even greater returns next year.
A number of its projects are show through and it expects to build up a cracking forward order book.
Align considers the group’s shares, now 2.1p, as a conviction ‘buy’ looking for 3.115p as their price objective.
The group has recently appointed Canaccord Genuity as a joint broker with Arden Partners, conveniently ahead of it announcing its 2020 results later this month.
(Profile 08.02.21 @ 2.2p set a Target Price of 3p)
Journeo (LON:JNEO) – a very swift journey
On Wednesday of this week, I profiled this transport sector solutions group at 94.25p, reckoning that its shares ‘could be a ride worth taking’ – well I hope that you did jump aboard.
They closed that night at 113.5p, up 20% on the day, and just pennies away from my price objective. However, that may well have proved to be too quick a response.
There is plenty of time for this stock, which closed the week at around the 106p level.
The group’s brokers WH Ireland conclude that the shares have a near-term fair value of 150p a share.
(Profile 07.04.21 @ 94.25p set a Target Price of 120p)
Strix Group (LON:KETL) – Berenberg rates the shares as ‘undervalued’
Analyst Lydia Kenny at Berenberg is looking for the Isle-of-Man based kettle controls group to double its sales over the next five years.
Accordingly, she rates the shares as ‘undervalued’ and has attached a ‘buy’ rating to her 330p price objective.
The group’s shares moved up almost 4% yesterday to close at around the 295.5p level.
I have been pleased with this company’s price performance to date and would consider the shares as a strong hold.
(Price profile 31.12.19 @ 196p set a Target Price of 250p*)
Totally (LON:TLY) – NHS Urgent Care contract extensions increasing
The provider of a range of healthcare services across the UK and Ireland announced this week that it has been awarded a number of contract extensions worth almost £18m.
That follows £16.8m of contract extensions announced in early February this year, together with £7.2m of extensions in January and £9.8m in December last year.
CEO Wendy Lawrence commented that the Urgent Care division’s contracts helped to strengthen the group’s partnership with the NHS.
The year to end-March 2021 results will probably be announced in July, but we could possibly see a trading update being given within the next couple of weeks.
The group’s shares, which peaked at 35p in early February this year, have come back to trade around the 30p level. Readers who followed up on the profile of a year ago and the several subsequent mentions will have done well.
So, what now? Although guidance from the company was suspended due to the Covid-19 crisis, my gut feeling is that the group has massive upside over the next few years. And its shares will reflect that potential.
(Profile 12.03.20 @ 12p set a Target Price of 18p *)
RBG Holdings (LON:RBGP) – finals due in 11 days
I have to say that I have been delighted with the share price performance of this legal services group since I profiled it in early February this year.
With its final results due to be declared on Tuesday 20 April, there does seem to be a pick-up again in the share price – now up to 112p, a clear 40% appreciation in less than three months.
Hold tight for good news with the figures.
(Profile 05.02.21 @ 80p set a Target Price of 100p*)
Aquis Exchange (LON:AQX) – a continuing long-term hold
After the 2020 results were announced a month ago it has been very pleasing to see the way this exchange services group’s shares have been advancing in response.
Tuesday 27 April is when the group should be holding its AGM, at which time it is more than possible that boss Alastair Haynes will be issuing another bullish statement on just how well his group is currently trading.
Do not be put off by him selling off 160,000 shares @ 650p each earlier this month. The disposal is part of his 2017 divorce settlement – it leaves him with 1.33m shares, representing some 4.9% of the group’s equity.
If you are a long-term holder, then be prepared to do just that and the rewards should be plentiful.
They close the week at around 695p.
(Profile 26.10.20 @ 435p set a Target Price of 606p*)
D4T4 Solutions (LON:D4T4) – adding even more business
Confirming the data solutions group’s confidence of additional business, it announced six new contract wins for its Celebrus products for a total of £3m of added revenue for the year to end-March.
That is expected to show through in its next set of results, due in June.
Brokers finnCap estimate £21.7m sales for the last year, with adjusted pre-tax profits of £3.5m and 7.1p in earnings per share.
For this current year they see £24m of revenues and £3.8m of profits, worth 8p in earnings, easily covering an estimated 3.1p per share of dividend.
The group’s shares, which have been up to 345p recently, close the week at around the 337.5p level.
Still early days with this group, its shares are worth holding for more good news.
(Profile 09.04.20 @ 170p set a Target Price of 215p*)
Norcros (LON:NXR) – some price climbing still to do
This group, which is a supplier of bathroom and kitchen products, is doing a lot better than originally expected.
Since its early February trading update it is apparent that the strong momentum in its sales has continued at quite a pace.
Allowing for effective management and tighter margin controls put into place during the 2020 lockdowns, the group should produce much better figures for the year to the end of last month.
Research house Edison has now upped its estimates after the end-March Trading Update, jacking them up by some 15% to £25.9m pre-tax profits, worth 25p in earnings and amply covering a 4p dividend.
Their estimate for the current year is for £336m of sales, £29.4m of profits, 28.2p of earnings and 7.8p per share dividend.
The group’s shares, now at 273p, have some climbing to do if they are going to achieve my two-year-old price objective.
(Profile 20.08.19 @ 214p set a Target Price of 321p)
SigmaRoc (LON:SRC) – finals due next Tuesday
On Tuesday 13 April, this construction materials group will announce its results for the year to end-December 2020.
On Wednesday of this week, analyst Charlie Campbell at brokers Liberum Capital reiterated his ‘buy’ conclusion by upping his price objective to 86p a share. That follows the group announcing the acquisition of two Belgian ready-mixed concrete businesses for some €13m.
He is looking for the group to have seen sales rise from £70.4m to £124m in 2020, with pre-tax profits leaping from £8.2m in 2019 to £11.5m last year.
For the current year he estimates £144m of sales and £14m of profits, worth 4.1p per share in earnings.
This group’s shares, now 81p, have been a good performer over the last six months or so. Its management is totally determined to continue to ‘buy to build’ its group still further – the shares remain a strong hold.
(Profile 04.09.20 @ 49p set a Target Price of 65p*)
AdEPT Technology Group (LON:ADT) – come on, it’s now time to get going
We will have to wait until July to see the finals from this group. In the meantime, could we see the shares actually start to move higher? I do hope so.
As one of the UK’s leading independent providers of managed services for IT, unified communications, connectivity and voice solutions, the group in the year to end-March is likely to have seen revenues fall nearly £5m to £57m, while its adjusted pre-tax profit may well have eased £1.6m to £6.3m, dropping earnings down from 28.1p to 22.7p for the year.
Analyst Kevin Ashton at N+1 Singer anticipates £59m in sales this year and £7m of profits, worth 23.7p in earnings.
With its shares at 250p as the week closes, I remain hopeful that further good news from the group over the next few months will help to engender investor interest, sufficient to get the shares back above my February profile price, with the aim of attaining my price goal.
So far, the share price performance has been totally lacklustre, but I have not given up hope.
(Profile 22.02.21 @ 260p set a Target Price of 325p)
Helical (LON:HLCL) – achieving high rental payments
Well, I think that Gerald Kaye, Chief Executive of this cracking property development and investment group, sums it all up very well: “There appears to be a growing sense of optimism that the easing of the current restrictions by the Government will continue as scheduled and that, over the next few months, businesses of all types will resume operations in line with the “roadmap” that has been outlined. It is to be hoped that there are no setbacks on this return to normality.”
Admittedly he was making some inference about the potential for people returning to their offices to resume normal working routines, which influences the ability of gaining full rental receipts from the group’s tenants.
Helical is such a class act it really only does its biggest chunks of business with international and very well-heeled business corporations, so it has achieved impressive rental payments during the pandemic – some 93% for all of the quarters during 2020, with just 5% rent holidays, and with 2% of payments currently in discussions with its tenants.
Time and time again circumstances have proved that you should never underestimate the management of this group.
If the group’s shares, now 417.5p, break above the thrice hit recent 430p peaks, then just make sure that you have a position in the stock. I feel that as times come right again the shares will head way above the 500p level.
(Profile 11.06.19 @ 389p set a Target Price of 500p*)
Safestyle UK (LON:SFE) – healthy profits expected this year
The Barnsley-based retailer and manufacturer of PVCu replacement windows and doors to the UK homeowner market will have noticed the recent building up of the holdings of SFM UK Management, now up 2.46% at 15.03% of its equity.
Last year’s loss of £5.2m should be replaced by a very healthy £6m profit this year, and then head up to around £8m next year, on the back of sales of £140m, then £150m next year.
I like the feel of this group. Its business will directly reflect ‘the return to normality’ and show big gains in its marketplace as the UK homeowners look to ‘jazz up’ their homes again.
The group’s AGM is due on 19 May, which is when we should get the next current year update from the company.
Charlie Campbell, analyst at Liberum Capital, has a 65p price objective on the group’s shares – which I consider will be easily beaten in a short timeframe.
Now at 56.3p, there is absolutely no need to reduce positions.
(Profile 06.01.21 @ 36.5p set a Target Price of 48p*)
(Asterisk* denotes that Target Prices have been achieved since profile publication)
Results, meetings or trading updates expected in the next two weeks:
Mon 12 Belvoir Grp (LON:BLV) Fins
Mon 12 Xpediator (LON:XPD) Fins
Tue 13 Corero Network (LON:CNS) Fins
Tue 13 SigmaRoc (LON:SRC) Fins
Thu 15 Epwin Grp (Lon:EPWN) Fins
Thu 15 Renold (LON:RNO) GM
Tue 20 Audioboom Grp (LON:BOOM) AGM
Tue 20 Card Factory (LON:CARD) Fins
Tue 20 DiscoverIE Grp (LON:DSCV) T/U
Tue 20 Porvair (LON:PRV) AGM
Tue 20 RBG Holdings (LON:RBGP) Fins
Tue 20 STM Grp (LON:STM) Fins
Wed 21 Carr’s Group (LON:CARR) Ints
Wed 21 Hunting (LON:HTG) AGM
Thu 22 Trifast (LON:TRI) T/U