Good morning, it's Paul with the SCVR for Friday.

I'm running late today - one of my dogs just got diagnosed with cancer, so I'm a bit pre-occupied. It's one thing after another this year, isn't it? Estimated finish time is 2pm.


Webinars earlier this week

I had some more thoughts on both Eagle Eye Solutions (LON:EYE) and Pci- Pal (LON:PCIP) which have both put out very interesting results webinars this week. Recordings are available, and well worth watching.

EYE is here, courtesy of our extremely busy friends Tamzin & Tim at PIWorld.

PCIP is here on InvestorMeetCompany. On this platform you have to make a list of companies you follow, to be notified of upcoming and recorded presentations.

Small Growth Companies

Subscriber IGotPoesJacket started an interesting discussion in the comments to yesterday's SCVR, talking about a strategy of buying into loss-making small caps, when they seem on the cusp of moving into profits from good growth. I was thinking about this last night. My biggest ever investment gain was on a Scottish CCTV company called IndigoVision, where I spotted that sales of its innovative product were beginning to take off (triple digit % growth from a low base). I worked out that on 60% gross margins, and with a largely fixed cost base, the operational gearing should result in the company rapidly moving into profit. That's exactly what happened, and the shares 30-bagged.

I've tried to find other similar situations since then, but without much success. There's the odd big winner, like Best Of The Best (LON:BOTB) for example, but most tend to disappoint. Why is that? It's usually because;

1) They struggle to maintain the revenue growth rate, and/or

2) Overheads constantly increase, thus moving profitability further & further into the future, like a mirage.

A good example of this is Cloudcall (LON:CALL) (I hold) which is delivering good revenue growth, but never achieves its profit targets, because costs keep rising. When I talk to management, there's always a sound commercial reason for the increased costs they are incurring, e.g. expansion into the USA (which has worked well), Australia (because multi-national potential customers want global coverage), adding more product features to maintain market relevance & leadership, etc.. As investors do we want companies to invest for growth, or to…

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