Small Cap Report (1 Feb) - BEG, ANP, IGP, EKT, ACL

Friday, Feb 01 2013 by
11

Begbies Traynor (LON:BEG) today issues the quarterly "Red Flag" report, which is always worth a read, since it gives an unbiased overview of the levels of corporate financial distress, and hence outlook for the economy overall. Today's report for Q4 2012 is striking in that it's remarkably upbeat, suggesting that companies which have survived this far are now recovering. Although consumer facing sectors are still in difficulties.

As regards the Stock Market, most of us are wondering how long this bull market can continue for? On the one hand the rises feel too far too fast (where have I heard that phrase before?!), but on the other hand markets have overall just gone sideways for the last 15 years or so. With small caps I'm finding plenty of reasonably priced companies (on PERs in the 8-12 range), but not many absolute bargains (PER below 8, with little debt).

That said, if you start factoring in increased earnings from an economic recovery, then many shares could end up looking very good value now with hindsight in a couple of years' time. So I'm inclined to stick with what I've got, and am fully invested at the moment.

Furthermore, there is also the hot topic of discussion at the moment about Bond investors starting to switch into equities, given the ultra-low yields on Treasuries. Anyone holding long-dated Treasuries is out of their mind in my opinion - not only have they got an artificially inflated (by QE) asset, but it's yielding virtually nothing, indeed has a negative real yield, plus we are probably heading for higher inflation as the inevitable result of money printing. So they are sitting on something that yields about 2%, yet could easily see 30% wiped off its capital value through higher interest rates. Surely at some point holders of those Gilts will wake up and smell the coffee, and rotate into equities? Arguably they need to feel pain from Gilts falling in value first, before they switch into equities. Maybe that is now happening?

Interestingly, I'm also seeing people reappear who have been out of the equities markets for years, drawn back in by this bull market (3 years too late!). So I suspect equities might surprise on the upside, as fresh money bids up prices, driven by poor returns elsewhere.

 

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Begbies Traynor Group plc is a business recovery and property services consultancy. The Company's segments include insolvency and restructuring, and property. It provides services from a network of the United Kingdom locations through two operating divisions: Begbies Traynor and Eddisons. Begbies Traynor is an independent business recovery practice that handles corporate appointments, serving the mid-market and smaller companies. It provides insolvency, restructuring and consultancy services to businesses, their professional advisors and financial institutions. Eddisons is a national firm of chartered surveyors, delivering transactional and advisory services to owners and occupiers of commercial property, investors and financial institutions. It provides professional services, such as business rescue options, advisory options, forensic accounting and investigations, corporate and commercial finance, personal insolvency solutions and services to banking, legal and accounting sectors. more »

LSE Price
46.69p
Change
-0.9%
Mkt Cap (£m)
52.3
P/E (fwd)
13.5
Yield (fwd)
4.7

Anpario plc is a producer and distributor of natural feed additives for animal health, hygiene and nutrition. The Company operates through two segments: UK and Eire, and International. The Company is focused on the manufacture and sale of natural feed additive products to agricultural markets. Its products for the poultry, pig, ruminant and animal feed markets include acidifiers, enzymes, essential oils, pellet binders, antioxidants, mycotoxin binders, mold control products and a range of nutritional premixes and performance enhancers. It offers natural feed additive/flavor called Orego-Stim. It offers its customers a number of omega 3 & 6 supplements for use in feed. Its products in the aquaculture range include growth promoters, immune enhancers and pellet binders for both shrimp and fish. The Company's trading brands are Kiotechagil, Meriden and Optivite, which trade across approximately 70 countries around the world. more »

LSE Price
251.7p
Change
0.7%
Mkt Cap (£m)
55.4
P/E (fwd)
14.5
Yield (fwd)
2.4

Intercede Group plc is a United Kingdom-based software and service company. The Company is engaged in developing and supplying of identity and credential management software. The Company provides MyID software, which is an identity and credential management system that enables organizations to create and assign trusted digital identities to employees, citizens and machines. Its MyID software protects the networks, facilities and intellectual property of governments, agencies and other enterprise customers. In addition, it provides MyTAM, which is a cloud-based service that provides Android application developers and service providers to deploy trusted applications to the trusted execution environment (TEE) on mobile devices. It offers its solutions to various sectors, including aerospace and defense, finance and telecommunications; governments and federal agencies, and mobile developers. The Company operates in the United States and the United Kingdom. more »

LSE Price
57p
Change
-5.0%
Mkt Cap (£m)
29.5
P/E (fwd)
n/a
Yield (fwd)
n/a



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8 Comments on this Article show/hide all

Death by Donut 1st Feb '13 1 of 8

Morning Paul ,
Just a comment to say that at the mo I agree with your no bargains around at the mo. I'm struggling to find anything I like at all at the moment as it all seems a little to good to be true tbh.
All this money printing is going to have a -ve effect in the end I think , no expert so I don't know what it will be but I'm guessing the little bloke will get shafted as usual?

Nothing under PE 10 is floating my boat .

DbD

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darlocst 1st Feb '13 2 of 8

Two shares on PEs of sub 8 & one just over:

MS International MS International (LON:MSI) - I wrote this when their interims were released last year: http://boards.fool.co.uk/ms-international-interims-12689857.aspx?sort=whole#12689857
IMS due out this month, they don't tend to issue it at normal 7am though.

Globo (LON:GBO) - I know Paul follows this one, house broker RBC eps forecast for 2013 is 5p, putting it on a fwd p/e of 6.75

Low and Bonar (LON:LWB) - Is trading on a fwd p/e of just over 8 currently, although it does have considerable debt. One to look out for, results out on Tueday.

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Death by Donut 1st Feb '13 3 of 8

Well for me and I only use DL for screening initially as I can't currently warrant a paid subscription given the amount I pay into my sipp each month.

MSI yield is too low
Globo doesnt have a yield
LWB too much debt.

I'm picky :0)

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Death by Donut 1st Feb '13 4 of 8

Can anyone remember the insolvency firm Paul wrote about recently? , gone right out me head.

DbD

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Paul Scott 1st Feb '13 5 of 8

In reply to Death by Donut, post #4

Hi DbD,

The only Listed insolvency practitioners is Begbies Traynor (BEG), as referred to in today's report.

Cheers, Paul.

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brigandchief 1st Feb '13 6 of 8
1

Well done Paul for your first week, go and have some nice red stuff! Continue to learn from you, many thanks for your comments that can be a good starting point to do some of one's own research!
Cheers David

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Paul Scott 1st Feb '13 7 of 8
1

In reply to brigandchief, post #6

Thanks David! My DryAthlon is complete now, and we raised £765 for Cancer Research (almost all of the money came from readers of this & my Blog, on top of all the sponsorship for the Half Marathon too!), so I'm really delighted with the outcome, and thanks again to everyone who donated. Also I've lost weight, and feel full of energy & sharper mentally after a month of not drinking, so even though I'm now allowed to have alcohol again (with it being February now), I don't actually want any!!

I'm glad you find the morning reports here a good starting point for research, that's the idea really, to flag up potentially good ideas, with a value leaning.

Cheers, Paul.

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CantEatValue 3rd Feb '13 8 of 8

"Interestingly, I'm also seeing people reappear who have been out of the equities markets for years, drawn back in by this bull market"

The logic of people who behave like this is totally nuts.

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About Paul Scott

Paul Scott

Paul trained as an accountant, then spent 8 years as FD for a ladieswear retail chain.He became a professional small caps investor in 2002 to date.Paul writes a small caps report for Stockopedia.com on weekday mornings. He joined Fundamental Asset Management Ltd as a research associate in 2014, as part of their Small Cap Value Portfolio team. more »

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