Small-cap updates on TED, SCE, FLO, PIER, BLV and CHAR
Ted Baker (LON:TED) – keep on tossing that coin
On 22 March I headlined my follow-up note on this ‘lifestyle’ brand stating ‘heads you win, tails you don’t lose too much’ when commenting upon the opportunity to make a quick gain in buying this group’s shares.
It was based upon the possibility of a bidder or two making a play for the fast-recovering group. The shares were then 124p.
First hat thrown in the ring was from the multi-billion private equity investor Sycamore Partners. Indications were such that a possible bid was inevitable.
Well, the $10bn Sycamore boys actually made a 130p a share approach – it was rebuffed. Then they came back at 137.5p – rebuffed again.
A second equity player emerged – with the Hong Kong-based private equity investors Oasis Management being seen as having built up, an albeit small stake in the group.
It too was, no doubt, attracted by the massive turnaround potential that was now becoming apparent for the previously stricken group.
My subsequent view was that a bid for the group just had to be above 150p from any well-heeled predator, while 180p could prove to be closer to the victorious level.
On Monday of this week the brand put itself up for sale – enticing possible bidders to make their approaches for the group through its two corporate advisory firms.
As I write this comment no movement has yet been notified.
However, the company’s shares touched 150p yesterday, prior to closing at 146p on the back of a dealing volume of over 1.6m shares traded.
I am very happy to state that the company has done absolutely the right thing in its own counter-play. It is defending itself well from being marauded by any ‘chancy’ pirates.
Although you can never be certain in such situations that any bid may ensue, with such ‘market bandits’ possibly being deterred from further moves by strong corporate defences.
Even so, I do predict that this situation could play out well over the next couple of months or so.
In its current loss-making state, the Ted Baker group is a victim of circumstance and is wide open to being taken.
The £270m group’s shares are still speculative but could well prove to be an excellent gambling counter for agile investors.
(Profile 14.07.21 @ 139p set a Target Price at 175p)
(Profile 22.03.22 @ 124p set a Target Price at 150p*)
Surface Transforms (LON:SCE) – beginning to get ready for revving up
I was pleased to see that analysts Raymond Greaves and Michael Clifton at finnCap have now upped their price objective for this group’s shares.
The announcement on Monday obviously pleased the duo, enough to heighten their aim from 69p to 80p a share.
Their note is headlined ‘FY2021 in line, all eyes now on FY2022 and beyond’ and they are so right.
This £108m capitalised carbon fibre reinforced brake discs maker has so much potential over the next few years.
It is a ‘developing situation’ and I do see its shares, which closed at 56.5p, as destined for far higher climes – 100p, 150p, 200p within the next three years or so is more than possible.
(Profile 19.09.19 @ 17p set a Target Price of 30p*)
(Profile 08.01.21 @ 50p set a Target Price of 65p*)
Flowtech Fluidpower (LON:FLO) – on course for pre-Covid recovery
This is the year that the specialist fluid power businesses will start to show full recovery to pre-Covid-19 levels.
Last week the 2021 results showed that times were getting better, and that the first three months of this year were already encouragingly ahead of expectations.
The shares, which were down to 104p at the end of February, hit 140p yesterday, before closing at 137.75p.
They touched over 150p last autumn and, in my view, will be up there again very soon.
(Profile 23.04.21 @ 105p set a Target Price of 130p*)
The Brighton Pier Group (LON:PIER) – still time to add to holdings
Well, last Wednesday I did say that this group’s shares were undervalued and should soon be trading in the 110p to 120p range.
The shares were then just 89p and that was after the company announced a cracking set of interim figures to end December.
The year to end June could well see it generate quadrupled pre-tax profits to £6m, worth 12.6p per share in earnings.
The shares will still be cheap even when they trade at 125p, which then only be on just 10 times price-to earnings.
I forecast that Luke Johnson’s management team could well be announcing an earnings accretive acquisition, making the valuation still rating way under that of its peers.
Last night they closed at 106p, after having peaked at 114p last Friday.
There is still plenty of time to add to holdings.
(Profile 30.06.21 @ 61p set a Target Price of 75p*)
Belvoir Group (LON:BLV) – strong annual recurring revenues underpin
In August last year, this property franchise group saw its shares peak at 326p. They subsequently fell back to 233p just two months ago.
Earlier this week the company declared its 2021 finals, showing 25 years of unbroken profits growth.
Revenues were up 37% at a record £29.6m, while pre-tax profits were 39% better at £9.3m, generating earnings 35% improved at 20.4p per share.
The current year could well prove to be uncertain in performance, even so the group’s ongoing annual recurring revenues will provide a solid buffer.
Analyst Guy Hewett at brokers finnCap is not put off at all, in fact he has upped his price objective for the shares to 371p, against the 267.5p at which they closed last night.
This company has performed very well to date, but could it be sensible to now look to ‘top-slice’ half of holdings to then ride the balance for almost free?
(09.01.20 @ 141p set a Target Price of 175p*)
And finally ……
Chariot (CHAR) – well done Evil
A total ‘hat tip’ to Simon (Evil Knievel) Cawkwell who mentioned a couple of weeks ago that the ‘family Cawkwell’ fancied a big rise in this company’s shares.
They were then just 12p, having risen from 9.5p a couple of weeks beforehand.
But the lift-up in price since Simon talked the stock has been more than impressive.
They peaked yesterday at 23.70p before closing at around the 21.60p level.
That is a cracking performance and, from what I see, that movement could be just the start of a staggering rise to come.
(Asterisks * denote that Target Prices have been achieved since Profile publication)