Ben Clark from TMS Capital is joined by Martin Hickson from Wilson Asset Management and David Keelan from Ellerston Capital to review five small caps flying high.
Martin Hickson: For us, it’s a sell. They’ve done a great job moving into the US and expanding there, also growing their share in Australia.
However, we think that the valuation more than reflects that. It’s on a P/E of more than 60 times on FY21 numbers. So, very expensive. For us it’s a sell.
David Keelan: We’re on a hold, and we agree management have done well, the story’s been one that’s been, it’s taken its time to get there but it has got there. But the multiple is priced in a lot.
David Keelan: It’s a buy for us. It’s a strong balance sheet, with a strong management team that have delivered over time.
It gives us good exposure to structural changes in infrastructure, like 5G and smart metres. And even at these prices here, we’re happy to own and given the low level of cyclicality in their earnings.
Martin Hickson: There has been, but we agree, we think it’s a buy. They’ve got strong tailwinds from the NBN roll out, the integration of Comdain, the recent acquisition is going very well. Despite the share price rally, it’s still trading on an attractive valuation, 15 times, we think it’s a buy.
Martin Hickson: Again, we think it’s a buy as well. They’re exposed to the shifter cloud, despite the share price run, it still is trading on 24 times, earnings growing in excess of 30 percent. So, we like it, we think it’s a buy.
David Keelan: We’re big believers of Rhipe, and we have been. Microsoft have 500 managed partners and Rhipe is probably number 12 in that whole list so, they’ve done a great job, they’ve got great support from Microsoft. We think it’s a buy.
David Keelan: Johns Lyng’s a builder and service provider for the insurance market, we like them because they’re solving a problem for insurers. Trying to bring down the cost of claims, and at the same time it has great operator levies to peak with events like the recent hail storms, and the floods in Queensland.
City Chic (formerly Specialty Fashion)
Martin Hickson: Yeah, we still like City Chic, we’ve liked it for the last 12 months. Again, attractive evaluation, solid first-half result, with like-for-like sales growth of around 10 per cent. Store roll-out programme, they’re opening 30 new stores in Australia, and strong online business in the US. So, we still think it’s a buy.