Tim Boreham is one of Australia’s best-known small-cap share analysts and business journalists. He has more than 30 years of experience writing for major business publications. He is known for the highly-respected Criterion investment column which ran for many years in The Australian newspaper. And, of course, Dr Boreham’s Crucible…

After a year of more corporate and market pivots and pirouettes than a pre-lockdown Bolshoi ballet training class, many investors will be wondering where to find value in a remarkably resilient market.

At the time of writing, the local bourse looked like ending steady for the year despite the earnings hit across so many key sector including banking, tourism and transport.

Rock bottom interest rates may well be enough to prop up the market, but the expert consensus – if there is such a thing – is that it’s hard to see equities surging much more from here.

What’s more, pandemic ‘hero’ stocks such as online retailers might struggle as their sales numbers are compared against their bloated lockdown figures.

As always, there are hidden gems on offer among the small to mid caps for investors willing to dig a little bit deeper.

For those who prefer to flop back and watch the cricket, we have done the work for them.

Courtesy of a motley array of brokers, advisers, soothsayers and corporate hangers-on, here are 21 stocks that will pop in 2021. Well, 10 – the other 11 were published yesterday. Here’s the link in case you missed it.

Catapult Group International (ASX:CAT) – market cap $385 million

The maker of performance monitoring wearables suffered during the pandemic as both professional and amateur sports shut down.

Notably, the company missed out on the key US summer selling period. Broker Morgans expects only a modest downturn in revenue and underlying earnings this year, with low churn and reduced cash burn.

With net cash of $35 million Catapult looks more like a recovery story for the 2021-22 year – but get on board now.

 

Praemium (ASX:PPS) – $320 million

Having acquired the listed Powerwrap, investment platform Praemium is taking on its bigger rivals such as the ASX-listed Hub 24 and Netwealth.

Economies of scale are crucial in the platform game and the combined two companies will have funds under advice of more than $31 billion.

The enlarged Praemium can also benefit from the major banks’ desire to exit or reduce their presence in wealth management.

 

Archtis (ASX:AR9) – $70 million

Concerns about cyber security have increased during the pandemic period, with reports of concerted state based attacks on critical government facilities.

The Canberra based Archtis is at the forefront of this war against (keyboard) terrorism, providing services to sensitive clients including the Department of Defence.

Archtis’s key offering is a tool called Kojenski Gov, a cloud based platform that enables sensitive documents to be shared without fear of leaks or other breaches.

Archtis recently acquired the Boston-based Nucleus Cyber for $9.75 million in a scrip deal and followed up with an $8.4m capital raising, taking cash on hand to $13.5m.

As with listed counterparts Tesserent and Whitehawk, Archtis has had a decent share price run but arguably it offers the best value of the trio.

 

Murray Cod Australia (ASX:MCA) – $100 million

In Cod We Trust?

Backed by the world’s greatest chefs including Fat Duck proprietor Heston Blumenthal, the company has supersized its growing capacity as it seeks to tackle premium export markets for the white fleshed fish.

Murray Cod is found only in the Murray Darling Basin. With commercial wild fishing banned, the company can aspire to be the world’s pre-eminent supplier and sales margins should reflect that.

Export markets need to return to normality first.

 

Imexhs (ASX:IME) – $50 million

Based in Bogota, Colombia, the medical imaging outfit is barely known by local investors, but works in similar sectors to the wildly successful, home grown Pro Medicus (market cap $3.4 billion) and Mach7 Technologies ($300 million).

The company has devised cloud-based products for radiologists and physicians to read and store medical images (including remotely). In particular, it’s focused on the underserviced market for smaller clinics.

Imexhs has a meaningful presence in its home Latin American markets and has just raised $8 million to support a foray into the US market.
Dare to dream that the company will be the next Mach 7 or Pro Medicus.

 

Rhythm Biosciences (ASX:RHY) – $160 million

Over 50s readers would be familiar with the ‘poo test’ which the national bowel cancer screening program send them every two years.

Most recipients don’t complete the test, which is unfortunate given bowel cancer is one of the most preventable cancers if detected early.

Rhythm has been toiling away on a more palatable blood-based test, called Colostat.

Rhythm shares have gained momentum but the company is still only valued at $75 million, which reflects there’s still some way to go before its test is approved.

 

Kina Securities (ASX:KSL) – $250 million

The key financial metrics of the Papua New Guinean bank and wealth manager are superior to those of the Big Four banks, which reflect the sovereign risk of trading in such a challenged nation.

Having bought the ANZ Bank’s PNG assets some years back, Kina has finalised the purchase of Westpac’s 89 per cent PNG and Fully-owned Fijian operations.

Funded by a $90 million capital raising, the acquisition swells Kina’s lending book from $540 million to $2.03 billion and its deposit book from $960m to $2.8bn.

Kina trades on a divided yield of around 11 per cent and a price earnings multiple of less than seven times. Its net interest margin on lending of 7 per cent compares with an average of 1.9 per cent for the Big Four.

Kina’s tier one and tier two capital adequacy ratio stands at 22 per cent, compared with 16.7 per cent for the majors.

 

Micro-X (ASX:MX1) – $125 million

The Adelaide-based medical device company is already marketing its portable X-Ray device that is lighter and smaller than conventional units.

As well as being suited for bedside use, the units have also been repurposed as “ruggedised” version for military and humanitarian field use.

The busy company also plans a stroke detection device compact enough to fit into ambulances. Arguably, though Micro-X’s bigger prospects lie with deploying its cold cathode nanotube technology for mobile airport baggage screening and self-service check in.

 

Mader Group (ASX:MAD) – $190 million

The holder of the best ASX ticker and a beneficiary of boom conditions within the WA bubble, Mader provides skilled labour for maintaining heavy mining equipment.

If anything, Mader was disadvantaged by labour availability constraints because of the state based lockdowns – but these are largely in the past now.

Mader upped its 2019-20 earnings by 19 per cent to $18.1 million and paid a total dividend of 3c a share.

On those metrics Mader trades on a price-earnings multiple of less than ten times and a 3 per cent yield. In the meantime the company is building its fledgling presence in the US, a “potentially larger addressable market”.

 

BetaShares S&P/ASX Australian Technology ETF (ASX:ATEC)

As a one-stop tech exposure, this exchange traded fund aims to track the performance of the recently created S&P/ASX Technology Index (before fees and expenses). The fund therefore gives passive and low-cost exposure to 58 leading and emerging local tech stocks, including Afterpay, Realestate.com and Xero.

Or if you really want to snuggle up with the tech big boys, the BetaShares Nasdaq 100 ETF includes global household names such as Amazon, Facebook and Google.

 

Vanguard Global Value Equity Active ETF (ASX:VVLU)

Market conditions in 2020 led to extreme differences in valuations, increasing the attractiveness of ‘value’ stocks relative to the broader markets.

This exchange traded fund uses a ‘rules based’ investment approach to target such undervalued companies that will benefit from an expected economic recovery in 2021.

The fund provides globally diversified exposures and would complement a well-diversified portfolio.

The author is not a licensed financial adviser and the contents of this article should not be construed as financial advice. Readers should consult their own tea leaves or seek professional counsel.

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.

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