Three small cap picks researcher Equity Story likes for March
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Each month independent research house Equity Story outlines three ASX small caps that look promising.
Last month the experts came up with Kogan, Valmec and Pioneeer Credit — and the results look good.
Kogan (ASX:KGN) finished the month up 31 per cent, pushing founder Ruslan Kogan to a personal wealth of $337 million.
Valmec (ASX:VMX) finished up 33 per cent and Pioneer Credit (ASX:PNC) at 17 per cent.
Here are their three favourite ASX small or mid caps for March (in no particular order):
Buddy Platform Limited (ASX:BUD)
Sector: Software & Services
Profile: Buddy offer a complete resources monitoring solution for commercial, industrial and multi-family residential buildings.
The system is made up of Internet of Things (IoT) class hardware and works by engaging with occupant dashboards for monitoring and reducing consumption of natural resources like electricity, water, gas, steam, temperature and humidity.
Why we like it:
Fundamentals: On the cusp and poised for a re-rate if the company delivers on its revenue assumptions. It is cashed up, has distribution deals signed globally and recent agreement with Nestle demonstrates the enormous potential of Buddy Ohm product.
This is a high-risk stock that offers large blue-sky potential.
Technicals: By no means the best-looking chart out there, BUD has been in a down trend since November last year. However, it has found some solid support on a weekly chart at 17c on the 200x day moving average.
For a company that was recently trading around 40c, we feel continued positive news flow coming from BUD could take the reins from here.
Lynas Corporation Limited (ASX:LYC)
Profile: Lynas is an integrated supplier of high quality rare earths, particularly the strategically significant neodymium, praseodymium (NdPr) and certain heavy rare earth materials. It has a portfolio of aligned assets to explore, develop, mine and process rare earth minerals.
Why we like it:
Fundamentals: If the rare earths markets keep on getting stronger LYC will benefit greatly as it is highly leveraged to improving prices.
The good news is the debt is shrinking, production is strong, and company is ready to engage with multiple parties re long term sales agreements. Still high risk but it’s poised to become profitable again after a long time in the doghouse.
Technicals: LYC has been in steady uptrend since June 2017, more recently bouncing nicely of short-term moving averages on a weekly chart.
Not to mention, it looks like it is locked and loaded to go straight through our (top secret) “Equity Story Buy Signal”.
Smart Parking Limited (ASX:SPZ)
Sector: Technology Hardware & Equipment
Profile: Smart Parking Limited provides car parking technology hardware, software, and associated products and services. It offers technology solutions, including radio frequency identification solutions that allow management of permit parking. The company also provides parking management services
Why we like it:
Fundamentals: The recent results were impressive with strong double-digit growth and cashflows. It’s getting close to becoming profitable which could see a major re-rate. The smart parking technology is global, and execution is all important here. Second half looks strong too, so plenty to look forward to. Directors buying on market also instils confidence.
Technicals: Another one that has been trading sideways for the past couple of months, but looks to have found support recently at 20c on the 200x day moving average of a weekly chart. We love the two big beautiful weekly green candles triggered by recent announcements. LYC looks primed to continue the breakout should it push through the resistance around 30c.
For the past five years the investment team at Equity Story has provided independent online trading advice to thousands of investors, providing them with direct buy and sell recommendations. To date, clients have received 400+ closed recommendations.
They are also the research team behind boutique wholesale fund manager – Edison Capital.
This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice.
If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a Product Disclosure Statement (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.