On the Radar: 5 small caps that brokers pick for growth in the months ahead
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As the year winds down and AGM season concludes, brokers have been busy filling their Christmas stockings with stock picks they think will be winners.
Here are five predictions made in the last week that stood out:
Navarre is drilling for gold in Western Victoria. Its neighbour is none other than Stavely Minerals (ASX:SVY), which became a four-bagger after a 40 per cent copper hit.
The excitement sent Navarre on a run of its own, from 8c to 14c. But while it has retreated back to 10c, WA broker Hartleys has put a 15c price target on it believing success of its own is near.
“Navarre holds out attention because we feel the company is one or two good holes away from a major discovery in the Stawell Corridor,” analyst John Macdonald said.
“Navarre has the management and portfolio to continue this sector exposure.”
Pain-detection software provider PainChek shot up from below 4c in April to as high as 35c in September.
Its rise followed reports of revenue generation and a $5m funding deal with the federal government.
While it has since retreated to 22c, Canaccord Genuity initiated coverage last week and set a price target of 55c.
“While PCK is in its early commercialisation phase, even revenue multiples don’t do justice to an assessment of the potential for this business,” Canaccord’s Martyn Jacobs said.
“This unique technology provides a breakthrough to an intractable problem in the aged care sector which is in desperate need of technological solutions to support the care of the elderly and particularly those living with dementia.”
Among predicted catalysts for growth were the expansion of the technology to infants as well as US FDA clearance.
Many rare earths are not actually rare, but resources projects in Greenland are.
And Euroz Securities reckons Greenland Minerals is “sitting on the largest undeveloped rare earths deposit globally”. It has a JORC resource of 1.01 billion tonnes at 1.1 per cent rare earth oxide.
It also hosts 266 parts per million uranium – making it the 5th largest uranium resource. Euroz analyst Michael Emery valued the company at 55c per share.
“As the largest undeveloped rare earths project globally with outstanding metrics, we see potential for Kvanefjeld to become the world’s leading rare earths mine,” he said.
This engineering firm expects $200m-$220m revenue for the financial year, higher than what Hartleys analyst Trent Barrett expected.
GR is at 80c but Barrett set a price target of $1.53 off the back of a solid sector outlook.
“The outlook for the sector remains strong, with an emerging pipeline of projects,” he said.
“An improvement in sentiment for capital availability for mining would be a big catalyst, as there is a big pipeline emerging of projects ready to be constructed when capital is secured.”
The drug maker is expecting several milestones in the coming months, one of which is due before the year is out.
Namely, its larger partner Boehringer Ingelheim announcing the results of a clinical trial of its drug BI 1467335 against NASH (Non-Alcoholic Steatohepatitis – a liver disease) and its plan to proceed with commercialisation.
Bell Potter’s Tanushree Jain’s share price target for the company is 59c when it is currently at 24c. She highlighted Boehringer’s decision as a catalyst which could add over 10c to the current valuation.