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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 Pittards, Esken and Braemar Shipping Services. Read about these Opportunities 4 Material Gains!
Mid-week Tip
Asset Backed Recovery Potential
Pittards (LSE: PTD) 62p (60p/64p) Mkt Cap: £8.1m This Leather and leather products producer has gone through many problems over the past two decades, but it is back on a firmer footing and has returned to profit. It is even paying its first dividend for 18 years. The focus on more technically advanced products has improved the business. The core markets are luxury goods and sporting gloves, while there are newer opportunities in aerospace, automotive and rail. Pittards has also launched a new anti-microbial leather called Tri Protex. Net assets are 104.6p a share based on fixed assets and inventories, which should retain their value. At the current price the shares are trading at a 40% discount to NAV. An interim dividend of 0.5p a share was declared, and a similar final dividend anticipated. A 2021 pre-tax profit of £500,000 is forecast, rising to £800,000 in 2022. That would put the shares on ten times prospective 2022 earnings with a forecast yield of 2.4%. Buy
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ESKN 13p- Flying Low
BMS 251p – A Raising Tide
Esken (LSE: ESKN) 13p Esken, the aviation and energy infrastructure group, raised an emergency £55m at 14p in July having been 40p this year. COVID has been a significant challenge, for this owner of the new city of Southend’s airport. The funding will help delivery of its longer-term strategic ambition so Esken can maintain its the operational capability despite Covid ramifications continuing. The capital raise and refinancing leaves £90.5m of liquidity available to half year, which gives some stability and includes £19.7m of ring-fenced cash in LSA, and a £20m undrawn Revolving Credit Facility. The news should start getting better but its too early to buy with confidence. Wait
Braemar Shipping Services (LSE: BMS) 251p BMS is one of the largest chartering and sale and purchase shipbrokers covering all the main commercial shipping sectors with revenues at £112m. It’s finance business provides corporate finance advice to the shipping sector advising on transactions, restructuring, capital raising and asset management. The Cory Brothers division offers logistics services and port agency services, including managing tugs, pilots including Covid-19 screening. Braemar’s Trading Statement confirmed a strong first half which we reported some weeks ago. All divisions should perform better for the full year to February 2022 and finnCap forecasts a recovery in pre-tax profit from £9.9m to £11.3m putting the share on a moderate P/E of 11x. Its recovering after restructuring so is well placed to benefits from the restricted shipping. Buy
Reviews
SNX – 110p – Stand and Deliver
KMK – 15.5p – Canary Singing
REAT – 1.98p – Full year shortfall
CKT – 49.5p – Extended BP deal
OPTI – 49.5p – Canada approval for Slimbiome
KETL – 292.5p – New product launches
Finally: The US and UK have interest rate decisions this week. In both cases an increase can be anticipated within months leaving some parts of the economy stressed and some investors anxious. The continuation of a flat market seems the best short-term outlook.
OMG! Opportunity for Massive Gains is a Premium Newsletter on ADVFN with two reports each week written by experienced small cap specialists. To get trips like this every week, sign up here.
