Small Cap Round-Up featuring Sureserve, discoverIE, Helical, Inland Homes, Strix and TClarke

5 mins. to read
Small Cap Round-Up featuring Sureserve, discoverIE, Helical, Inland Homes, Strix and TClarke
Master Investor Magazine

Master Investor Magazine 60

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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…

Sureserve (LON:SUR) – very positive AGM statement

Wednesday’s AGM statement was quite a pointer.

Both financial and operational performance have been strong in the first few months of the current year, in fact ahead of its own management expectations.

The group is very aware of any impact of the virus and has taken appropriate steps to enable it to operate as normal as possible.

I am sure that this asset and energy support services business will perform well in this current year.

Its shares touched 51.5p after its recent results but have since fallen back to a wallet-tempting 31.5p.

I see pre-tax profits in the year to end September rising a good 20% to £10m, worth 5.1p in earnings per share. That puts them out at a very low 6 times current year earnings.

I bet they will easily hit their 2020 High within months.

Profile 14.01.20 @ 36p set an end 2020 Target Price of 50p *.

discoverIE Group (LON:DSCV) – time to buy?

Just over a month ago this innovative electronic component’s group saw its shares peak at 606p, today they are around their low of 387p.

Yesterday’s March 2020 year end Trading Update stated that its fourth quarter started to see some disruption to its business. It has two manufacturing plants in Guangdong in China, where it extended the Chinese New Year break, but it has since returned to full production levels.

Even its other plants in Sri Lanka, Thailand, South Korea, Poland, Slovakia, the Netherlands, Belgium, Germany, the Nordic region, Mexico, the US, Canada and the UK have all been operating without major disruption.

Despite that the last quarter’s earnings will suffer a modest hit.

However, the group stated that “We are confident that our clear strategy focusing on the target markets of renewable energy, medical, transportation and industrial & connectivity to create sustainable organic growth will enable us to continue to outperform wider industrial markets and generate significant stakeholder value.”

Could now be an excellent time to get into its shares? I think so!

Profile 08.08.19 @ 438p set an end 2020 Target Price of 550p *.

Helical (LON:HLCL) – property assets worth more than twice this price

Big investment values have become apparent in the property sector of late. To my knowledge Covid-19 has not infected brickwork, so those companies with investment portfolios of office buildings hold appeal. Their share prices have fallen in line with the market generally, while their net asset values have remained the same, thereby creating a bigger investment margin for protection.

Such an example that I favour is this company, one of London’s leading property developers.

Its tenants are major, if not multinational companies, strongly in the professional and financial sectors.

This is a long-term winner. Its shares, which topped out at 540p a few weeks ago, have since then fallen to a 200p low and are now at 255p.
Its net assets are way over twice that figure!

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Master Investor Magazine 60

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Profile 11.06.19 @ 389p set an end Target Price of 500p *

Inland Homes (LON:INL) – a bargain basement price?

This property development group has a wide range of business continuity plans in place to mitigate potential disruption to the business from the spread of COVID-19.

The shares have fallen steeply, unjustified in my opinion, from a recent High of 94p to a Low of 32p. They close the week at 38p.

Profile 13.8.19 @ 68p set an end 2020 Target Price of 110p.

Strix Group (LON:KETL) – both impressive and confident

This Isle of Man based group, which was set up in 1982, is today the global leader in the design, manufacture and supply of kettle safety controls.

It is also a market leader in the making of other complementary water products used in temperature control, steam management and water filtration.

Its core products are safety controls for small domestic appliances, mainly kettles.

It does have production facilities out in Guangzhou, China. It was quick to respond to any potential production interference due to Covid-19, and its manufacturing side is now operating at 96% of its resource levels, with just one week’s closure over the New Year period.

Furthermore, all of its top 20 OEM customers have resumed their own production and are continuing to increase capacity.

The results for the year to end December 2019, were announced on Wednesday and they showed a steady 3.3% advance in sales to £96.9m, while pre-tax profits were 3.4% ahead at £30.2m (impressive margins?).

Earnings came out at 15.2p per share, up 2.1%, while the dividend saw a 10% increase to 7.7p per share (confident?).

The group’s shares were down from a Christmas Eve 200p High to just 110.8p ahead of the results. Since then they have bounced convincingly to the current 150p, that compares favourably with broker Peel Hunt’s Buy advice with a 175p Target Price.

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

TClarke (LON:CTO) – just 4 times historic earnings

Yesterday morning saw this 130-year old building services group declare its finals to end December 2019.

A small 2% increase in revenue to £334.6m helped pre-tax profits improve 15% to £9.0m, while earnings jumped 23% to 18.37p per share.

The dividend, cautiously perhaps, was raised 10% to 4.4p per share. Its end year net cash was steady at £12.4m, a useful balance, emphasising its robust financial position.

The group’s end of year order book was 2% lower at £403m.

The shares, which were up at 137p early in the New Year, are currently trading at around 85p after touching 71p earlier this week.

They are trading at a mere 4 times earnings – which is ridiculously out of line and incredible value.

Profile 10.12.19 @ 120p set an end 2020 Target Price of 165p.

And Finally…

Rank Group (LON:RNK) – a longer-term recovery stock

On the face of it the bears have really won the day in this gambling group’s shares.

Within the last month they have collapsed from 329p to just 91p currently. The news that it is getting support locally for its Belgian and Spanish businesses, coupled with the UK lockdown, has helped to drive the share price so much lower.

However, despite its sharp business decline, I would give out a big wager that it will recover itself and that its shares will show a big rise when the virus clouds shift.

I would even set a new end 2020 Target Price of 150p.

Profile 13.06.19 @ 157p set an end 2020 Target Price of 220p *.

( * denotes that set Target Prices have been achieved. )

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