To wrap up my review of stocks from my recent momentum screen, this week I’m going to look at two small-caps from the screen results.
Both of these firms have recently issued bullish trading updates. I think they both have the capacity to deliver substantial growth over the next few years, if things go to plan.
(As a quick recap, I’ve also covered three FTSE 100 stocks from the screen and two mid-caps here.)
Quixant (LON:QXT)
AIM gaming technology stock Quixant (LON:QXT) has traded on the London market for nearly a decade, during which period its shares five-bagged … and then came crashing down again:
The 2018-20 share price slump was caused by a pre-pandemic slowdown in customer orders. This was then compounded by the impact of Covid-19, which caused a near-total shutdown in Quixant’s core casino market.
However, the company appears to have moved on from these setbacks, aided by a very strong recovery in the US casino industry. As I’ll explain, I think Quixant is now starting to look like an attractive growth play again, with good earnings momentum and a reasonable valuation.
About Quixant: the group was founded in 2005 to produce computer systems for casino gaming machines. Co-founder Nicholas Jarmany remains on the board as deputy chairman and is still the company’s largest shareholder, with a 17% holding.
Today, the business is divided into two divisions:
Quixant: the core business generates about 70% of profit, producing computer systems for casino-type gaming and sports-betting machines. The firm has also recently expanded into cabinet design and recently reported a $4m order for this new line:
Images © Quixant
Densitron: this division specialises in “human-machine interface” technology. Its main customer base is the broadcast industry, with products such as touchscreens and control devices:
Image © Densitron
Quixant acquired Densitron in 2016. Two of Quixant’s founders worked for Densitron before founding Quixant, so we might speculate about the level of objectivity in that transaction. However, we can at least be sure that they knew the business well.
Recent trading: the group’s October trading update reported strong trading in both the Quixant and Densitron businesses. Full-year guidance for adjusted…
