OMG! Tuesday 20 April: Summary of last week’s newsletter

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The OMG newsletter recommends at least 15 companies each month, using the writers’ experience of small caps to give you a winning edge. Last week they wrote about Kromek, Proteome and Itaconix. Read about these Opportunities 4 Material Gains! 

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Wednesday Tip

Xpediator (LSE: XPD), 62p (61p/63p) Mkt Cap: £87.8m It has been a volatile year for freight businesses with Covid-19 and the switch from the EU single market to the UK’s free trade deal with the EU. Freight forwarder and logistics company Xpediator (LSE: XPD) is in a good position to take advantage of the opportunities that the changes and uncertainty are providing. The geographical spread has helped Xpediator. Higher revenues in Lithuania and Bulgaria offset the dip in the UK last year. Xpediator has taken on around 50 additional people to cope with the additional paperwork due to the UK/EU trade deal. Additional charges appear to be more than covering this extra cost. The share price has already had a good run, but the rating is relatively low at just under 13 times prospective earnings. Acquisitions are on the cards and they are likely to boost earnings and reduce the multiple. There will also be a growing dividend. Net cash was £6.7m at the end of 2020 and even after paying dividends during 2021 this figure should rise without any acquisitions. Expect at least some of the cash to be used to finance acquisitions, though. Buy for organic and acquisitive growth.

 

Results Preview  Monday 19th

Pennant International (LSE: Pen) 46.5p  provide an extensive range of technical training solutions and software products & services to clients around the world in the commercial, government and the defence sectors. Its orders tend to be lumpy playing havoc with setting revenue expectations and results have disappointed more than be a pleasant surprise. For Wednesday’s Finals Trading is expected to have improved significantly in the second half helped by the cost reductions of around £1m.  Pennant expects to make an EBITDA profit of approximately £1.0m with a £0.3m Operating Profit, contrasting with the Interims to June 16% revenue decline to £6.3m, a £2m EBITDA loss with a LBT £3.6m (loss £1.8m). Cash generation is strong and net cash is estimated at £2m and with the HSBC increased overdraft to £4m, sufficient   finance seems in place for the anticipated recovery.

 

Review Section 11th April

 

CGH – 27p – Solid Gold

GHS – 1430p – NAV growth

NFC – 776p – Shopper purchase

IOM – 292p – Downgrade

TPG – 5.85p – US collaboration

MERC – 32.25p – Investment gains

 

Finally – markets are firming up as the economy unlocks so and more than usually, we will listen to the BOE’s Governor speech on Wednesday. Although there is  pressure on Andrew Bailey to be prudent  surely it is  too early to dampen the recovery expectations.

 

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