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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…
Solid State (LON:SOLI)
This computing, power and communications products manufacturer and electronic components distributor on Thursday of this week announced its trading update for the first six months to end-September.
It is going great guns, it appears, and is confident of delivering upgraded profits for the full year. Despite uncertain economic and political hassles, it is showing good organic growth. Its cash generation is encouraging, and its order book is rising.
We will get a further update when the company announces its interims on Tuesday 3 December.
The shares were just 404p when I profiled the company in mid-August, with a target price of 546p. They are now trading at around 483p.
I note that finnCap, the company’s brokers, are going for 610p – that gives me even more confidence in the company and the upside for its shares.
On the Beach Group (LON:OTB)
The UK’s leading online retailer of beach holidays has recognised the potential of trying to gain some of the business lost by the demise of Thomas Cook. It is now increasing both its offline and its online marketing to win more customers.
CEO Simon Cooper informed shareholders that “On the Beach has an exciting opportunity to significantly increase its market share over the short to medium term by leveraging its strong brand and core capabilities.”
We should get an updated picture of its progress when the company announces its final results to end September on Wednesday 27 November.
From 359p just over a month ago, after the Cook collapse, the company’s shares have improved to the current 453p. That compares with my end-March profile price of 446p, with a target price of 630p, which I lowered a couple of months ago to a more realistic 550p.
I see that both Liberum Capital and Peel Hunt rate the shares as a ‘buy’, the former going for 520p and the latter for 550p.
discoverIE Group (LON:DSCV)
I see that Jefferies International have placed a ‘buy’ rating on this group’s shares, at the same time as raising their target price from their previous 500p to 540p.
That brings the brokers closer to my own early August valuation when I profiled the shares at 448p; they are now 458p. That is quite an impressive performance after the group last week announced its £33m placing of 8,034,840, new shares at 415p per share for its £58m SansTech acquisition.
Forterra (LON:FORT)
A slightly bearish trading update from Forterra, one of the UK’s leading producers of manufactured masonry products, suggested that sales volumes have weakened of late, despite an improvement in productivity and strong cash generation.
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Pre-tax profits for the full year will now be modestly below last year’s £64.8m. However, the board remains in its corporate strategy and infers that the group is well positioned to gain from better medium-term market fundamentals.
The shares were 286p when I profiled the company way back at the end of May, they have been up to 316p subsequently, but are now back to 270p
Bloomsbury Publishing (LON:BMY)
I see that BlackRock has been continuing to gnaw away at the publishing group shares. They are now up to 4,114,203 shares, representing 5.46% of the company’s equity.
In the last two weeks the shares have been nudging ahead from 232p to the current 259.5p, after touching 268p on Thursday. They were last trading at around these levels in December 2006, after having peaked at 376p in June 2005.
The company will be announcing its interims next Tuesday morning. I remain very bullish of this quality company and feel that my 300p top target price, set in March this year, will soon be achieved.
Chemring Group (LON:CHG)
I am watching the current price action of shares in this defence and security market solutions company.
Over the last couple of weeks or so they have risen from 186p to now trade around the 203p level – now that may not sound a lot but I remain very conscious that there could well be some US private equity players eyeing over the company, its strengths and its markets.
It really is ideally placed to be taken over whilst it offers such incredible value to a predator. Capitalised at just over £540m it would be a tasty morsel for a bidder.
My Target Price remains at 300p.
Cohort (LON:CHRT)
This could well be another player in the defence and security related markets that could also be in someone’s targets.
I profiled the company in early August at 446p, with a 607p target price. The shares are now nudging upwards at 535p, just a couple of pence off its all-time high.
We are a month and a half away from the group announcing its first-half results to end-October. Before then I expect its shares to rise even further.
Block Energy (LON:BLOE)
From the beginning of May, the shares of this company, which is focused on becoming the largest independent oil and gas producer in Georgia, have been in an increasing decline. From 17p, then to a low of 3.95p in the middle of this month – that fall was really quite steep and perhaps overdone.
They are now trading at 6.50p, after peaking at 7.77p on Thursday morning of this week.
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The shares are obviously becoming an interesting trading counter and I believe that the company will do its utmost to come out with loads of good news items to get its shares back up to the headier peak levels again.
In early June I profiled Block Energy, then at 13p, with a speculative target price of 25p. That may well look far too optimistic right now; however, I still feel that this tiddler does have investment merit in its corporate strategy.
The work that it is doing on its West Rustavi field could well prove highly rewarding. So, I stick to my target price, which if achieved before the end of next year will see the shares almost quadrupling.
PCF Group (LON:PCF)
On Thursday morning this finance company, turned specialist bank, issued a trading statement for the year to end September, declaring that trading was in line with market expectations.
Those results will be announced on Wednesday 4 December.
The lending portfolio grew 54% to £338m by the end of the year. Furthermore, it is now well on the way to the group’s £350m target, a good year ahead of its plan. It has a target of getting to £750m by 2022, which at this rate of progress should be easily achieved.
New business originations rose 51% to £223m, up from £148m, with 74% of those in the group’s prime credit grades.
I have been following this company since it went public in 1998, when it raised just £800,000 to fund its expansion as a motor finance company – it placed 1,230,769 new shares at 65p each. Since then, its fortunes have been up and down; however, they are now very much on the up.
It has a very solid determination to achieve its targets within the next three years or so – but I do feel that it will do so successfully inside that timeframe.
The company is controlled 63% by the Bermuda Commercial Bank, which is itself a subsidiary of the Bermuda Stock Exchange quoted $310m valued Somers Limited, who were previously 55% majority shareholders in Stockdale Securities, the broking house now part of Shore Capital.
I remember Scott Maybury, then Finance Director of the company when it went public, alongside Tony Nelson as his MD. Now Scott is the Chief Executive, and he is extremely capable and very focused upon the growth of his group.
Since I profiled the company way back in late February, with its shares at 32p, they have been an almost ‘non-performer’ – they have been up to 34.5p and as low as 24.5p just a couple of months ago. Now at 32p, I do hope that they have the aspiration to rise back up to the 43p level that I set as a target price.
And finally…
Futura Medical (LON:FUM)
I would have thought the news that this innovative products pharmaceutical company, specialising in a novel drug delivery technology for erectile dysfunction therapy, would have been a gainer on the news earlier this week that it had now finished its Phase 3 study for its MED2005 product – an important milestone for the company.
However, its shares have fallen back from 34p to trade at around the 26.5p level. Now that I would have thought was an attractive buying level for speculators going for even better news coming out over the next few months.
Perhaps the big conference presentations this weekend over in Tennessee will see some reaction from the erectile dysfunction specialists who are gathered there listening to expert dissertations.
Whether that drips down to punters in the market in due course may be an even bigger pointer to the positive news that I expect to hear from the company.