THE SUNDAY ROAST: The ASX small caps that lit a fire under Stockhead’s experts this week
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It was another solid week for the Emerging Companies (XEC) index, rising 4.91% to Friday’s close, outperforming the All Ordinaries (2.31%) under power of the sudden rise of the Buy Now Pay Later cohort.
Big gains were made for investors who bravely weathered the storm to hold onto the likes of Sezzle (ASX:SZL, up 286% to Thursday), Laybuy (ASX:LBY, up 222%) and Zip (ASX:Z1P, +89%), although most gave back some on Friday.
Resources (ASX:XJR) stocks were also up a healthy 4.87% heading into this week’s Diggers & Dealers conference in Kalgoorlie. Small cap explorer Cobre was on top this week, doubling its 5c price on Wednesday after hitting a copper motherlode in Botswana’s Kalahari.
Here’s a quick look at what ASX small caps caught the eye of Stockhead’s experts this week.
Barry FitzGerald heads to Diggers & Dealers this week looking for bargains with a typically canny strategy in mind off the back of quarterly earnings reports.
With cash flows drying up, those reports provide the best indication on which junior explorers are cashed up enough to make it through the next 12 months without hitting up shareholders for funds in a dilutionary raising.
Doubling down, Garimpeiro’s searching for cashed up juniors who are also potentially verging on big discoveries, meaning equity markets will throw the extra cash at them just for being good at what they do.
Fitting that bill:
Talisman (ASX:TLM) – Trading at 14.5c for a market cap of $27.2m. It’s got $8.2m cash in the bank plus royalties flowing from an iron ore mine in WA. And with a potential high-impact copper and gold hunt in NSW ready to go..
Falcon Metals (ASX:FAL): Trading at 22.5c for a market cap of $40m. That’s more than a 50pc discount to its IPO price last year. Has a $26.5m kitty to get through the tough times while searching for a “new’’ Fosterville, north of Bendigo in Victoria. And it just reported nice results from one of the prospects…
Noted environmental warrior Guy Le Page has checked the monthly EV sales figures and yep, they’re up… again. China – +40% month-on-month. Europe – +20.2% MoM. US – +5%. (They’re trying though – +71% YoY.)
You can pick your battery metal for a future-focused investment, but Le Page has plumped for nickel this week. A rummage around in the bargain bin turns up Adavale Resources (ASX:ADD), a Tanzanian nickel explorer bedding down a $3 million share placement at 2 cents per share.
ADD’s got a couple of high priority targets ready for surveys and drilling, 100% owned licences, and $4 million in cash to fund a stacked 2022/23 program. With more than 32 targets, that makes for a busy 12 months of announcements.
Everyone’s looking for a Chinese reopening trade.
Investment manager James Whelan from VFS Group has his eye on something different from the regular mining and daigou plays. It’s been a long lockdown and as we all know all too well, you can miss the little luxuries. Or, in the case of China’s rapidly expanding middle-class, the big ones.
Whelan’s contenders are luxury goods ETFs SSGA (code STR, listed in Paris), iShares ESIC (listed in London) or “just going direct” into LVMH (Moet Hennessy Louis Vitton SE) in Paris.
“The ETFs carry a P/E of about 12x,” Whelan says. “Happy there. This time next week I’ll be long one of those.”
Rounding out with some short, sharp moves this week – regular rich-lister Nick Politis dropped the clutch on an extra 50,000 shares in Eager Automotive (ASX:APE), Twiggy snapped up an extra 4.55 million shares in Bega (ASX:BGA), and WA entrepreneur Craig Mitchell became Fenix Resources’ (ASX:FEN) new most substantial shareholder.
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. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.