Can you make money in small caps this year?
Smaller companies have faced a wall of selling in the past 3 - 4 months as investors re position into banks and resources. Reporting season has provided an opportunity to assess the damage and to start scouring for opportunities. David Allingham from Eley Griffiths and Andrew Smith from Perennial share their views on the small companies universe following reporting season.
Key Points
- It had been a brutal confession season leading into results so expectations were low and the low expectations were generally met
- Outlook statement suggest it is still pretty tough to 'make a buck' out there
- Small companies remain vulnerable to even the smallest 'misses'
- Mining services companies delivered the most positive set of outlook statements, there remain some pockets of value in this sector
- The volume of share price moves to the downside is throwing up opportunity to go looking at companies with beaten down share prices
- Potential for an inflation spike later in the year, high PE stocks will be particular vulnerable even if nothing changes with the business
- Balance sheets will come into focus as rates move higher. Avoid companies that are over geared
- The opportunity set in small companies has opened up following a swift rotation back to large caps (Bank/Miners)
To hear about some of the opportunities being identified in the latest episode of Buy Hold Sell. Watch Here
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Buy Hold Sell is a weekly video series exclusive to Livewire. In each episode two fund managers give their views 'Buy, Hold or Sell' on five ASX listed companies. Not recommendations, please read the disclaimer and seek advice where appropriate.
More from Buy Hold Sell
Give this wire a like if you've enjoyed the discussion and hit follow to be notified when new episodes are released. You can check out more great episodes by clicking the button below.
- Buy Hold Sell: 5 stocks with controversial leaders
- Trump v Kamala: What a win for either party will mean for markets
- Buy Hold Sell: 5 interest rate sensitive stocks for a new world of lower rates
- Buy Hold Sell: 5 founder-led companies on the rise
2 topics
1 contributor mentioned
Comments
Comments
Sign In or Join Free to comment
most popular
Equities
Don't let all time highs stop you buying this "bull" market
Centennial Asset Management
Funds
If 24 LICs ran the Melbourne Cup, which would be our favourites
Affluence Funds Management