Small Cap Round Up: featuring Tricorn, Vitec and Futura Medical

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Small Cap Round Up: featuring Tricorn, Vitec and Futura Medical

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…

It is ‘silly season’ time so take advantage to buy

You can really feel that the height of the holiday season is upon us. The roads are that much easier to drive, the airports are suffering strikes of various kinds and the dealings in the market are falling to a minimum.

Add to those conditions the fact that the value of sterling is collapsing, which, with the majority of the FTSE 100 constituents deriving massive swathes of overseas earnings, would normally mean that their market values reflect the potential increase in their profitability.

But alas it is not so. The markets really are so feeble that they are not responding in the normal ways. Perhaps it is the political pressure that is weighing more heavily – with Corbyn now declaring himself as Prime Minister (yes, it really is ‘silly season’ time). As a result of all this, the indices have been falling back significantly.

Taking the strong view that we will get through the next couple of months almost unscathed and face up to whatever the result of all the manoeuvring around Westminster and Brussels, we will live to fight on and prosper against the odds.

If that is so, then perhaps now is the time for canny investors to vote with both their feet and their wallets and take positions in those value stocks that have previously tempted them but passed them by.

The FTSE 100 closed the week at 7,111 – give it a couple of months and it will be running ahead again and if you don’t pick up a few bargains now you may well kick yourself later. But remember, at this stage it really is best to seek out the value stocks.

Tricorn’s £15m of net assets and yet a market cap of only £5.7m

On Thursday night Tricorn Group (LON.TCN), the AIM listed pipe and tubing manipulation specialist, announced that it had posted its 2019 Annual Report and Accounts to shareholders. I read it online that evening and was very pleased with its well laid out descriptions, comment and content.

The Malvern based company, which has manufacturing facilities in both the US and China, as well as in the UK, employs just 300 people.

It supplies some of the world’s largest blue-chip and OEM companies and specialises in the energy and transportation sectors globally.

I look forward to a bullish trading update from the chairman at next month’s AGM on Wednesday 11 September.

With its shares at just 17p the company is valued at a paltry £5.7m, yet it has a turnover of £23m, upon which it is estimated that it will make £1.2m pre-tax profits in this current year. End-year gearing was down to 45%, while its net assets are an impressive £15m.

I set a target price of 27p in my mid-July profile on the company. I remain confident that this will be achieved – as a I said then a no-brainer for investors able to buy a few and just tuck them away.

Read the original write-up HERE.

Equals confirms ‘press speculation’ about a fundraising

In the middle of the week Equals (LON:EQLS), which rates its company as a leading challenger brand in banking and payments, stated that it had noted some recent press speculation.

It confirmed that it is progressing a possible fundraising for £14m at a price of 110p, another £2m of which will be available to existing shareholders on an open offer basis. The fresh funds will be used for accelerating its organic growth and to also help to fund any likely acquisitions.

Just a couple of weeks ago it announced that its FairFX subsidiary had acquired the international payments business of Hermex International in a £2m deal. The acquisition is a natural fit in with its existing e-banking and international payments business.

The fundraising news helped push the shares down to 107p at one stage, which was somewhat disappointing after the recent run from 89p up to 132p. However, the reasons for raising the funds make a lot of sense. Full details were posted off to shareholders yesterday.

Within months I see the shares, which closed last night at a much steadier 108.5p, moving back up after the fundraising to trade around the 132p.

Read the original write-up HERE.

Hey laddie – what’s on the box?

The recently announced interims from ITV (LON:ITV) were disappointing but not unexpected. I just hope that the Scottish broadcast media company STV Group (LON:STVG) will have fared better than its peer.

We shall see just how the company has performed in its first half to the end of June when it publishes its interim results on Tuesday 3 September.

In the meantime, I am pleased to note that the Crystal Amber Fund has slowed down the sell-off of its stake in the company, with no disposal notifications so far in August.

STV shares closed at 371p last night, at which level they are trading on just under 8 times current year estimated earnings while yielding a very healthy 5.5%. Hopefully my rating of the shares, as being an excellent purchase, will continue after the forthcoming interims.

Read the original write-up HERE.

Beds and sheds company Harworth interims due early next month

One of the better companies in the land regeneration and property development sector, Harworth Group (LON:HWG), will be announcing its interim results for the six months to the end of 30 June on Tuesday 10 September.

I really like this ‘brownfields to beds and sheds’ company. I believe that its development functions are much required and that it is very professional in the way it does its business.

This year, on a modest increase in full-year revenue, pre-tax profits could make a very useful 57% advance.

These interims will point the way. Its shares closed the week at 132p, with my 170p target price still intact.

Read the original write-up HERE.

Confidently airy fan group

Earlier in the week Volution Group (LON:FAN), the global ventilation products firm, indicated that it expects to release its finals for the year to end July on 9 October.

The group pointed the way to reporting a 15% growth in revenue for the year to around £236m, of which just 2.6% was actual organic growth, with acquisitions making up the balance.

Despite Brexit uncertainty the group has confidence in its future, helped by its new product investment, its geographic diversity and its very wide product portfolio.

My end-May profile estimated the pre-tax profit to come out at around £40m for the full year. It featured the shares at 174p and, despite tricky markets of late, they closed the week at 176p. I maintain my 250p target price.

Read the original write-up HERE.

Simply whizz at Simply Biz

Yet another company that is announcing its interims to end-June on Tuesday 10 September is the SimplyBiz Group (LON:SBIZ), the independent provider of compliance, technology and business services to financial advisers and financial institutions in the UK.

I understand that the company has continued to deliver organic growth in both its revenue and its profits and that its directors are confident that the group’s overall performance will be in line with expectations.

When I profiled the company, way back in April, its shares were 208.5p and I set a 250p to 300p target price range.

They closed last night at just 195.5p, even so I continue to rate the shares highly.

Read the original write-up HERE.

Futura really is perking up

Way back in March I profiled the potential of Futura Medical (LON:FUM). This pharmaceutical company is in the process of developing a portfolio of innovative products currently focused on sexual health and pain.

The shares were then just 15p, a level at which I suggested that a small ‘tuck-away’ speculation could well pay handsomely when a burst of good news items gain the shares some attention.

They have since been as high as 47.5p, which was just a month or so ago.

Hopefully we will get a progress update when the company announces its interims to end June on Wednesday 11 September.

The shares closed last night at 42p.

Read the original write-up HERE.

And finally…

Just what are Vitec’s ‘insiders’ doing?

I do like to see company directors buying shares in their own quoted companies.

So, I took pleasure in noting that Richard Tyson, a non-executive at the Vitec Group LON:VTC), the fast growing image capture and content creation solutions provider, has done just that in investing nearly £30,000, by buying some 2,654 shares at 1,123.9p each plus dealing expenses. That is his total holding in the company.

Even more encouraging was the fact that two days later the Chairman, Ian McHoul, doubled his holding by buying 5,000 shares at 1,180.9p

That was straight after the company announced its interim results on Thursday of last week, showing a 15.7% fall back in pre-tax profits at £16.6m. Perhaps we should take those dealings as strong pointers, not to be missed, of insiders’ views on the company’s prospects.

The shares closed last night at 1,090p after a dismal week in the markets. My end 2020 target price is 1,600p – with the insiders buying I could well be proved right.

Read the original write-up HERE.

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