OMG! Tuesday 5 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 Ondo InsurTechAttraqt Group and Applied Graphene Materials. Read about these Opportunities 4 Material Gains!

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Mid-week Tip

CANDO

On its recent listing  Ondo InsurTech (LSE: ONDO) raised £3.5m at 12p with 25p warrants, to roll-out its compelling home leak detection technology to Insurance companies. It is estimated that $17bn of water damage claims are made annually and  LeakBot is   proven proprietary technology that helps reduce these claims.  The small easi-fit  LeakBot device and software alerts the house owner /policyholder that there is a leak and can also  call  a plumber to fixit. The estimated market is 97 million home owners who could benefit from lower insurance premiums if they fitted the devise. This makes it  a win-win,  as insurance companies also benefit from reduced water damage claims. The LeakBot, is sold to insurance companies on a SaaS model   at a recurring  fee of around £2 per user per month. The insurance company may give the LeakBot to the house owner who will receive an early warning that a pipe is leaking that previously would  have  only be obvious after considerable water damage is done.  The LeakBot is estimated to have a 5-year lifespan and to cost less than £15 to produce in volume. Ondo is targeting breakeven within 18 months as these contracts are closed. Ignoring the Homserve Loan , after cost we estimate there is around £2.5m cash to progress the business which  should be sufficient for gaining commercial traction. At the current  11p it  makes a speculative buy before the hoped for news starts to flow.

 

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Hockey Stick

Attraqt Group (AIM: ATQT) 30.5p (30-31p)Mkt Cap: £61m. ATQT provide AI (Artificial Intelligence) search and   SaaS solutions to online retailers and brand owners in order to significantly improve the online shopping experience and sale..  The platform enables internet retailers to personalise services to individual customers, in real-time, across both online and offline channels (omnichannel) It business has been developed with acquisitions and fund raisings the last one was in October 2020 a £4m at 32p.  The Interims to June 2021 remained loss making but revenue momentum was reported to be building. The interims showed a cash outflow of £1.3m and net cash of £3.5m- we would feel, ‘shop-lifted’ if further funds were needed other than for an Earnings Enhancing acquisitions.  Its 73% gross margins could create a Hockey Stick  effect on profits as revenues increase. Medium Term buy

 

Jam needed

Applied Graphene Materials (LSE: AGM) 20p (19-21p) Mkt Cap £13m AGM harness the super power material of Graphene which its strong with high electrical and thermal conductivity and can be used to make products better.   Over the last 10 years AGM have   raised over £36m most recently at 41p with Institutional investors such as IP Group 11.5%, Herald 9%  by making  enough promises for Jam tomorrow to re-float the Titanic.  The finals to July 2021 reported that 40 products were available to distributors, but revenue was a mere £123,000 with a negative gross margin and operating expenses of £3.5m making a Loss of £3.6m. Wednesday’s Interims will report on the progress of a ground-breaking new range of eco-friendly graphene that helps improve sustainability of its client’s product formulations of paints, coatings, and composite materials. We are generally too kind and patient with companies creating exciting new ‘potential’ products. Wait.

 

Reviews

XLM – 40p – Pocket a Profit

DBOX – 11.25p – Model working 

BOKU – 117p – Bulging eWallets

PGH – 331p – Lagging recovery

KETL – 194.2p – Coming off the boil

MER – 210p – Resilient business

SBTX – 33p – Disappointing progress

MERC – 34p – nDreams uplift

PRES – 88p – Recovery on track

EAAS – 10.75p – New e-charging service

IGR -73p – Director buying

 

Finally

It’s already been signalled that  US interest rates with raise further from 0.5% but the pace of increase is the worry   barometer of whether Inflation or Recession is its biggest concern. In a relative way inflation is better for markets than recession.

 

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