THE SUNDAY ROAST: The ASX small caps that lit a fire under Stockhead's experts this week

There are several themes driving resources explorers up on a daily basis right now. Score a lithium hit on the side, upgrade a lithium resource, or simply announce a pivot towards lithium and you’re in gravy for a couple of days with share price pops measured in the tens of percentages.

Copper? Not exactly rushing to the renewables transition-led highs it’s expected to. But BHP’s spurned $8.3 billion takeover bid for OZ Minerals has certainly prodded the sleeping red metal giant.

And then there’s rare earths. Project acquisitions, drilling, high grade rock chips — even a sniff of REE prospectivity – has ASX minnows enjoying huge gains. The lightest mentions of REE potential in the past couple of weeks have resulted in instant +20% share gains on the day.

Sounds like a good place to start this week.

Barry FitzGerald

So if both SA copper and rare earths were housed inside a lightly capitalised explorer with a technically proficient exploration team running the show, Garimpeiro asks, who would sit up and take notice?

Well, Garimperio would. Which is why if you’re into cheap (7 cents), well-managed explorers you might take a look at Adelaide-based Petratherm (ASX:PTR). Its copper chops might not be realised until drilling begins second quarter of next year (tantalisingly close to hallowed IOCG deposits). But a recent high grade mineralisation discovery in weathered clay now has management licking its lips over the potential to add an initial rare earths resource, at low cost, to the run sheet.

Before Christmas.

Stake

Oh alright, let’s do lithium as well. It simply refuses to run out of steam.

Eliot Hastie is the Market Insights Editor for trading platform Stake and while he noted users were starting to move away from the riskier tech stocks like Zip (ASX:ZIP) and Sezzle (ASX:SZL), towards more established stalwarts like BHP (ASX:BHP) and Macquarie (ASX:MQG), there was still huge belief in the lithium sector.

Their favourites on Stake? Core Lithium (ASX:CXO), with a recent increase in its mineral resource estimate, and a potential binding offtake term sheet with none other than Tesla on the table.

Lake Resources (ASX:LKE), especially with industry veteran David Dickson taking over as CEO. Dickson is currently senior advisor to Quantum Energy Partners – the leading global provider of private capital to the responsibly sourced energy and energy transition and decarbonisation sectors.

And the eternal crowd favourite (some might dare whisper “meme stock”) Sayona Mining (ASX:SYA). Its rise of over 100% since the start of 2022 earned it a spot in the S&P Dow Jones ASX 200. Now it has exposure to new, larger investors.

John So

VP Capital co-founder

Over the last four to six months tech and Software-as-a-Service stocks (SaaS) have taken a bit of a hit, trading below even their COVID lows.

If you’re aware of how well contrarian investing’s worked out for Warren Buffett, you’ll have already sensed an opportunity in that opener. John So certainly did, and was happy to share a handful of stocks he believes don’t deserve to be dumped.

Take Whispir (ASX:WSP) for example, the cloud based omni-channel communications-as-a-service platform provider that combines internet and mobile phone messaging tools.

It counts Qantas, Disney, and Australia Post as customers, its revenue consistently grows at 20 to 30% per annum, and it’s trading at five-year lows.

Bigtincan (ASX:BTH) provides AI powered sales platforms, connecting sales teams with each other. It has enough cash to see it through for at least another two years, is growing at 15-30 per cent organically, and aiming to hit annual recurring revenues of $137 million plus this financial year.

And finally, Dubber (ASX:DUB) has been growing between 10 to 15% per annum and in the past financial year it grew closer to 25%. It provides recording technology to the likes of Optus and Microsoft Teams and is also a standard feature for some of Cisco’s products and cloud calling subscriptions.

In terms of value, it’s trading on trade on “a little bit over two times annual recurring revenue”, So notes, “which is … a very big discount to companies trading at eight to 12 times revenue multiple before these interest rate rises.”

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead.
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