Which 3 ASX Small Caps will be the next Afterpay?
Richard Hemming
Our analysts have selected these 3 ASX shares for their potential growth. Investing is all about supercharging your wealth.
In this article, we give you independent financial analysis on three ASX Small Caps that have the power to be the next Afterpay. Remember we first tipped Afterpay when it was only $2.51 and no one else in the market was interested in it! Today we are telling you about three more Small Caps!
Can you really afford not to follow our independent investment advice
Pilbara Minerals (PLS)
AVA Risk (AVA)
Laserbond (LBL)
Read more about Investing in Small Caps. Why we picked these ASX Small Cap gems and their outstanding performance.
Small Cap 1: Outperforming Lithium producer
ASX Small Cap: Pilbara Minerals (ASX: PLS)
Pilbara Minerals is an Australian based lithium-tantalum producer. It owns 100% of the Pilgangoora hard rock lithium-tantalum project, located 120km south of Port Hedland, Western Australia. The company is also aiming to build a presence in the downstream value-added lithium market through the development of chemical conversion plants in South Korea and China.
Sector: Australian hard rock developer
Current Price: $1.52
Market Cap: $4.4bn
Dividend Yield: 0%
Net Debt: $30m
Under the Radar Report first tipped: October 2021 at $0.32
RETURN since Under the Radar Report first tipped it +(inc div) +377.8%
We re-entered Pilbara in October 2020 at $0.32, which means at current prices we are up almost five-fold in less than eight months! And guess what? We still like it!
We continue to be attracted to the lithium commodity because of a looming lithium supply deficit for electric vehicle batteries. PLS’s West Australian Pilgangoora lithium resource is one of the largest hard rock lithium deposits, is producing and is poised to increase production with offtake agreements with several battery producers.
Pilbara is going from strength to strength. In December 2020, PLS announced the acquisition of the neighboring Altura Pilgangoora project, comprising a mine and processing plant that had successfully operated before receivership due to low lithium prices. The miner’s Stage 1 nameplate capacity of 330k tonnes a year spodumene (lithium concentrate) capacity, can now be expanded to 1m tonnes.
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Small Cap 2: Outperforming Lithium producer
AVA Risk (ASX: AVA)
Sector: Security technology and hardware
Current Price: $0.38
Market Cap: $92m
Dividend Yield: 7.1%
Net Debt: $13.4m
AVA’s journey has been a wild ride since its 2015 IPO, being involved in the consolidation of loss making businesses. AVA’s optic sensing technology back then was only used in perimeter security and monitoring oil and gas pipelines. It now has a multiple applications involving data network security, road, rail, power cables and conveyer monitoring. It has made some acquisitions, which have further diversified its business into locks and special package delivery.
When we first tipped AVA in late July 2020 the company was a month away from announcing its FY20 results for the 12 months to 30 June but we had confidence in a company that had a patchy track record. Why was this? The company had been producing positive operating cashflow, primarily due to a contract with the Indian Ministry of Defence. This was, admittedly coming to an end, but we could see that the company’s technology was being commercialised in a number of areas and that its transport division (AVA Global) had built up a strong niche.
We did well to take profits at over 60 cents less than five months later in late December 2020, at more than three times our initial tip price, although subscribers who have held on are still doing very well. We upgraded to Hold following weakness.
Small Cap 1: Outperforming Surface Engineering
LaserBond (ASX: LBL)
RETURN (inc div) +98.2%
Sector: Surface engineering
Current Price: $0.87
Market Cap: $84m
Dividend Yield: 1.4%
Net Debt: $3.7m
Who says manufacturing is dead in Australia?
Certainly not our subscribers who have almost doubled their money in less than a year.
Nor does LBL’s manufacturing customer base, both in Australia and now in the US. Late last month LBL signed a licencing agreement with a North American manufacturer of high-performance products and equipment largely used in primary industries.
The license involves the supply of LaserBond’s cladding equipment during FY22 providing revenue of $1.5m, with ongoing license fees of $144k a year and up to approximately $670k a year in consumable sales, for a term of 7 years.
We continue to like LaserBond because of the strong demand for its surface technology, which reduces wear on vital components, lowering operating costs and extending equipment life.
When we first covered LBL the company had revenues of $22m and had downgraded profit forecasts causing a 20% decline in its shares. This announcement helps put it on track to achieve its FY22 target of $40m, which would be a pretty amazing achievement.
Under the Radar Report: ASX Small Cap Stock picking experts!
Our financial analyst team lead by Richard Hemming, have in FY 21 selected and initiated a buy recommendation on 16 NEW Small Caps that we have not covered before. These 16 new ASX small cap stocks that we have tipped to subscribers have generated.
average return of 47%!
we've only been active on these 16 new stocks for an average of four months only!
12 out of 16 are well up , with three true stars, and our subscribers have made a lot of money
4 are in the red but we are still positive on them and there is still money to be made.
The banking and finance sector is one of the largest markets on the ASX. To learn more about our research on the Banking and Finance Sector, click here.
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