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 IG Driver Group, Hardide and Nexus Infrastructure. Read about these Opportunities 4 Material Gains!
Mid-week Tip
BUIDLING CONFIDENCE
We last researched Driver Group (LSE:DRV) after the Interims reported in June and were buyers at 50p. The recent raise in the share price is a reminder of the progress as the subsequent Trading update confirmed that the underlying PBT is expected to be in line with expectations at £2m on £35m turnover which is for the Y/E September and will be reported shortly.
Driver Group is a global professional multi-disciplinary consultancy service for engineering and construction projects from ‘soup- to-nuts’, including claims, expert witness, and dispute resolution services it was founded in in 1978 and floated in 2005. Profits for Sept 2022 are forecast at £3m of for an EPS of 4.7p with a 1.75p dividend which would be a prospective P/E 12.8x with a 2% yield. Supporting the recovery is AB Traction a Swedish Company which increased its stake last week from 18.27% to 19.56% and there are 41% of the shares not in public hands. The growth prospects remain undervalued and high operational leverage of the new businesses could surprise worth buying at 60p and a Mkt Cap of £32m.
Results Preview
Materially Better
Hardide (LSE:HDD) it’s trading update was passively bullish as the loss for the full year to end September will be lower than previously expected, when its reported this Wednesday. The horrendous interim Loss before Tax was £1.4m on revenue of £1.7m down from £3m the second half, however, has improved losses will still be significant. Its customers include leading companies operating in the energy sectors, valve and pump manufacturing, precision engineering and aerospace industries. Since the interims it has received full approval from Airbus to coat and process its components and there are also new opportunities in the electric battery storage market and steam turbines. After this year losses of and estimated £2m the company could return to more than break-even in 2022. At 31o and a Mkt Cap of £18m the strength of the recovery may not be exciting. Wait
Pause for Growth
Nexus Infrastructure (LSE:NEXS) 228p Mkt Cap £104m We have been buyers of NEXS from 145p this year and it reports finals for the 12 months to September on Friday. It’s a provider of essential infrastructure services, utilities connections, electrical vehicle charging and smart energy infrastructure. The Interims to March showed that all is fundamental growth drivers were positive. Three divisions are active on site and winning new business TriConnex, the utilities business is delivering both revenue and profit growth. eSmart Networks, the smart energy business, gained strong traction with revenues up 155.9% to £2.8m at the interims. Tamdown, the civil engineering business, however had been hit by Covid and turnover significantly down so the overhead has been ‘resized’ although it should come out of Covid and H2 should be brighter. Nexus should return to more than pre-Covid levels of business, which in 2019 was a profit of £4.2m for an EPS of 10.95p and a 6.6p dividend which implies a P/E of 21x and a 2.9% yield it’s a rating that anticipates increased in orders for EV charging points. Helped by the £10m funding in June 2020 at 140p the balance sheet is strong with net Cash of £10.7m, an NAV of £30.2m allowing the resumption of the dividend and it should be sufficient to fund the planned growth.
Reviews
AQSG – 26p – Home Grown
BLV – 278p – Continuing progress
CRU – 16p – Profit improves
VCAP – 51.5p – Bouncing back
SBTX – 46p – Forecast margin downgrade
AMYT – 145p – Switch to ADSs
NFT – 2.6p – Investment turn
Finally: we guess UK interest rates will not be increased this year.
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