Penny Stocks & Small Caps!

Buying quality companies when gloom booms

Contrarian investing sounds good in theory: buy high-quality companies at bargain prices when they are dumped on excessive negativity. But it is hard to in practice when share prices are falling and media reports imply a company is in turmoil. Consider these five stocks: South32, Flight Centre, IOOF Holdings, Slater & Gordon and FlexiGroup. Each…

Micro-cap stock to watch

There is an enduring truth in small entrepreneurial ventures: the founder is invariably the best CEO for the business and his or her departure can significantly weaken performance. There is a misconception that the entrepreneur should stand aside as the business starts to mature, replaced by a career manager who has more skill in stgeloping…

Follow the smart money in times of uncertainty

As the sharemarket flirts with a technical correction, many investors will look for beaten-up stocks that offer better value. Often, they buy stocks that are still overvalued because their perception of value is anchored in past share prices. They inevitably “catch a falling knife”. A less-considered strategy is buying stocks that rally during sharemarket sell-offs,…

Gold explorer is potential takeover target

The column has been cautiously optimistic on gold. I outlined a positive view for The Bull last year, nominating Newcrest Mining, Silver Lake Resources, Northern Star Resources and the ETF Securities gold exchange-traded commodity (ETC) for exposure to gold bullion in US dollars. Newcrest has rallied from $11.50 in March 2014 to $13.80, Silver Lake…

High growth stock with outstanding record

Price-earnings (PE) multiples have a habit of trapping unwary investors. A stock with a low PE that looks cheap keeps falling because it is poor quality. Another with a high PE seems expensive but the price keeps rising because of the company’s outstanding earnings growth. Investors who base decisions on simple rules of thumb learn…

3 backdoor listings to watch

A lift in reverse takeovers or so-called ‘backdoor listings’ on ASX this year is creating opportunity for eagle-eyed investors who are comfortable with micro-cap stocks. Unlike initial public offerings (IPOs), backdoor listings usually have little fanfare and speculators can easily overlook them. There is no central source of public information on backdoor listings, meaning market…

Two retail stocks making solid gains in a challenging climate

It is hard to get excited about discretionary retailers in this market. Several look cheap, but weak consumer confidence, volatile retail sales growth, and a sluggish Australian economy are a terrible backdrop for the sector. Business and consumers lack confidence to spend more. Then there are structural threats of higher competition from foreign and online…

3 winners from the cloud

It is hard not to like the long-term prospects for companies that provide Software As A Service (SAAS). Although there is plenty of hype, the move by companies worldwide to license software on a subscription basis and have it centrally hosted has a long way to run. Instead of investing heavily in software and in-house…

Stock to gain exposure to global tech companies

For almost two years, this column has emphasised the importance of having a higher portfolio allocation to international equities. A badly overvalued Australian dollar, trading above parity with the US dollar in early 2013, strengthened the case to buy offshore. But a bigger reason was gaining better exposure to industries poorly represented on ASX and…

More opportunities emerging in the recovering United States market

It is getting harder to buy direct or listed Australian property. Values are elevated despite a sluggish economy and the prospect of higher unemployment. Property fundamentals need to improve in 2015-16 to reduce the disconnect with valuations. Consider the Australian Real Estate Investment Trusts (AREIT) market. On some measures, it is trading 5-10 per cent…