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…
Sureserve (LON:SUR) – I am increasing my target price by 40% to 70p
Wednesday’s trading update from this compliance and energy services group was very positive.
It has cleared its debt and increased its order book over the last few months. Very few companies have shown enough confidence to give profit guidance for current and prospective years, but Sureserve is one of them.
Estimates now suggest £9.25m pre-tax profits for this year to end-September, worth 4.7p in earnings, and £10.35m for next year, worth 5.25p in earnings.
Both brokers Shore Capital and N+1 Singer are bullish about the company and its prospects, with the latter targeting 83p for the shares.
I am also very keen on what Holt is doing with this £75m valued group. It has significant ability to grow in sales, profits and corporate aspirations.
I am now confidently raising my target price to 70p.
(Profile 14.01.20 @ 36p set a Target Price of 50p*, which has already been beaten.)
Braemar Shipping Services (LON:BMS) – Highest since early March and more to come
Wednesday’s AGM statement from this leading international provider of shipbroking, financial advisory, logistics and engineering services principally to the shipping and energy industries was confidence inspiring.
And it was certainly positive enough in its content to push its shares upward to close at their highest since early in March, at 144p.
The group stated that, “Overall, Braemar has continued to trade strongly since the beginning of the current financial year, despite the challenges caused by the COVID-19 outbreak on global trade. None of the Divisions have taken advantage of the UK furlough scheme and all employees have been productive servicing clients at a high level. “
I see this group’s shares, which were up to 220p in January this year, going back up to trade in the 160p/180p range, possibly before the interim results in October.
(Profile 05.12.19 @ 185p set a Target Price of 250p.)
(Profile 20.05.20 @ 99p set a Target Price of 150p.)
Luceco (LON:LUCE) – Almost doubled since mid-June
Ahead of its interims being published on Tuesday 8 September, the manufacturer and distributor of high quality and innovative wiring accessories, LED lighting and portable power products, issued a trading update mid-week.
The company informed shareholders that it has upgraded its guidance given to the market in the middle of last month.
The group’s performance has continued to improve and its expectations for full year 2020 Adjusted Operating Profit have increased from at least £18m to at least £23m.
Both Liberum Capital and Peel Hunt have accordingly raised their ‘buy’ ratings on the shares, from 200p to 220p for the former and from 135p to 198p in the latter broker’s view.
The shares closed at 186p last night, having almost doubled in price since my mid-June profile on the company.
(Profile 15.06.20 @ 96.1p set a Target Price of 125p*, which is already beaten.)
Alumasc (ALU) – We will soon find out why
Come Tuesday 8 September we will see why various of this UK-based premium building products, systems and solutions group’s directors have recently been buyers of the group’s shares.
Almost 80% of group sales are driven by building regulations and specifications (architects and structural engineers) because of the performance characteristics offered.
The group has three business segments with strong positions and brands in their individual markets. The three segments are: Building Envelope; Water Management; and Housebuilding Products.
At the end of July, the company stated that trading has been better than management expected at the outset of COVID-19 and continued to show an improving trend, despite the challenging environment.
The group’s shares closed last night at 76p at which level I consider them to be significantly undervalued.
(Profile 13.02.20 @ 116p set a Target Price of 145p.)
(Profile 08.06.20 @ 80p set a Target Price of 105p.)