Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to see what’s hot, their top picks and what they’re looking out for.

Today, we hear from Dean Fergie, director and portfolio manager at Cyan Investment Management.


What’s hot?

Tech is still where the action is, according to Fergie.

“It had a little bit of an upset earlier in the week but again it seems to be, maybe not bouncing back, but it seems to be holding its own for sure,” he told Stockhead.

We spoke to Fergie back in April and since then “valuations have definitely been spurred on”.

READ: Money Talks: After making 20x with Afterpay, Cyan’s now got its eye on these tech stocks

“They’ve probably come back in the last three or four weeks, but the market is pretty buoyant,” he explained.

“At the moment the people that are onboard that sector are making very, very good returns for themselves and their clients.”

Fergie said some of the bigger established players like geospatial map technology company Nearmap (ASX:NEA) and digital audio-visual networking firm Audinate (ASX:AD8) are generating “pretty good revenues”.

“They’re not incredibly cash flow negative, they’ve got substantial revenues, they’ve got good clients and they’ve got good businesses,” he said.

“The market is just subscribing some decent valuations to them.”

He also pointed to recent float of buy now, pay later stock Sezzle (ASX:SZL), which kicked off its July ASX debut at over double its IPO price of $1.22. It is still up over 85 per cent at $2.26.

Check out: 90 Seconds With…Charlie Youakim at the Sezzle IPO 

“There’s a lot of investors that still seem to want to get into this space,” Fergie said.


Top picks

Hospital software company Alcidion (ASX:ALC) has made it onto Fergie’s list this time around.

“That’s had a pretty good run,” Fergie said. “It’s up a couple of hundred per cent over the last few months, but that’s been backed up by some really strong revenue growth.”

Alcidion, which has a market cap of $117.5m and a share price of 16.5c, recently reported its second consecutive quarter of positive cash flow.

This bumped its FY19 net operating cash flow surplus up to $2.1m and its available cash reserves up to $3.4m.

FY19 final revenue is expected to be between $16.5m and $16.9m.

The company has also been making significant gains with its clinic support software in the UK.

Fergie still likes Atomos (ASX:AMS), which makes and sells camera add-ons for amateur Instagrammers and professional photographers.

Since Fergie tipped Atomos back in late April, the company’s share price has jumped nearly 40 per cent to $1.30, boosting its market cap to around $200m.

“They’re going to do $50-odd million in revenue this year,” Fergie said. “So it’s anything but a kind of pie in the sky business.”

A new pick of Fergie’s is ReadCloud (ASX:RCL), which is involved in the digitisation of text books for schools and vocational education enterprises.

The company has a market cap of $20m at a share price of 38c.

ReadCloud became cash flow positive in the June quarter after a second consecutive quarter of record cash receipts.

FY19 revenue came in 129 per cent higher than FY18 at $4.8m, increasing the company’s cash position to $3.1m and no debt.

New ASX entrant QuickFee (ASX:QFE) also made it onto Fergie’s list.

QuickFee acts as payment intermediary for services firms in the legal and accounting professions. It offers an online portal that allows customers to pay when and how they want, reducing the lag times on late payments and smoothing out cashflows for the service providers.

On its debut in mid-July, QuickFee closed out its first session 150 per cent higher than its 20c IPO price.

The company is still up 70 per cent at a share price of 34c, which gives it a market cap around $43m.

“QuickFee is probably more of a business facing company than Afterpay (ASX:APT), but I still think it’s got some really potentially good success ahead of it,” Fergie said.

“They’re just launching into the US and I guess if you become successful even in a modest way in the US you do really well.”

Cyan Investment Management has stakes in all of the stocks mentioned.

Dean Fergie has over 25 years of experience in the funds management industry covering all major asset classes. He has lectured for the Securities Institute of Australia and is a graduate of the Australian Institute of Company Directors.

The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead. Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.