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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 Real Estate Investors and XLMedia. Read about these Opportunities 4 Material Gains!
Mid-week Tip
Real Improvement
Full year figures from Real Estate Investors (LSE: RLE) 38p, Mkt Cap £70m, show how well it is weathering the UK economic problems. A focus on the West Midlands has helped the property investor and disposals of non-core assets mean that the balance sheet has strengthened. Valuations are rising and occupancy rates can be improved. The yield is around 8% and there is room for continued improvement in the dividend. Real Estate Investors is a real estate investment trust focused on the Midlands. Non-core properties outside of the core region have been sold. It seeks income and capital growth potential in well-located assets that can benefit from improved management. There is a spread of sectors in the portfolio. Offices account for 34% of income, traditional retail 19% and discount retail 13%. Medical, financial and other sectors make up the rest. Revenues fell from £16.4m to £16m in 2021, reflecting disposals. Pre-tax profit was £13.9m, helped by disposal gains of £1.18m and increase in the value of the portfolio of £4.95m.Loan to value has fallen to 42% and could fall further. The Total dividend was 2% higher at 3.0625p a share and set to increase to 3.3p this year. Buy for income and further narrowing of the discount to NAV.
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XLMedia (LSE: XLM) 27.5p (27-28p) Mkt Cap: £72m XLMedia is a global digital performance publisher, operating across a variety of vertical markets including online gambling, personal finance and sports. It uses proprietary tools and methodologies to identify and target high value consumers for platform operators. It’s recent trading update set the tone for a recovery in line with expectations with revenue of $66.6m compared to $54.8m and an EBITDA of around $17.2m which is ahead of the previous $12.2m and is likely to reinstate its dividend. t raised £24m at 40p in 2020 and the cash balances are expected to be around $25m. There have been unsettling Board changed as price has been in decline from its all-time high of 200p in 2018. The US sports revenue is reported to be particularly strong having made two acquisitions and new publishing partnerships as more states legalise online sports betting. The recovery should be gathering momentum. Buy
Reviews
PTD – 66p – Debt strapped
PEN – 37.5p Testing Upturn
SCN – 55p – Demand Pull
LUCE – 214p – EV buy
IQG – 130.5p – Heading to breakeven
KAPE – 400p – Doubling profit
SRC – 78.5p – Earnings growth accelerating
MWE – 62.5p – Russian sale
DNL – 17p – More cash required
Finally
The effects of Chancellors Spring Statement offering support and sliding in the prospects of a Tax cut in 2024, while the actual uncapped energy price which is yet to start, leaves a thickening layer of economic gloom over short- term prospects. The economic news slop seems to be skidding nearer to a precipice.
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