10 Years: Our top 10 Stocks by Performance
Caroline Mark
We're celebrating 10 years at Under the Radar Report! After all, it’s been a big decade.
Term deposits are negligible which is a stark contrast to our top 10 Small Cap performers, 7 of which are 10 baggers.
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OUR TOP 10 STOCKS + 10 INVESTMENT LESSONS
We love finding powerful small caps for you to invest in. Our 10 best performers were little once.
1. AFTERPAY (ASX:APT) : RETURN +4815.5%
LESSON: Don’t be afraid to make a bet on a small disruptor.
Industry: Technology
Tip date: 18/05/2017
Tip price: $2.51
Last price: $123.38
Radar Rating: Take Profits
We first covered this stock in May 2017 (Issue 242) at $2.51 in an issue where we were covering shadow banking and two nascent players, Afterpay and ZipMoney.
The term buy now pay later wasn’t even used for these point-of-sale entrants, whose aim was to offer a better experience for customers and merchants. They’ve certainly done that for shareholders!
Back then its market cap was $450m, with net cash of $21m. The Square Inc purchase price is worth $40bn and Afterpay’s price is close to $127.
There was a great deal of uncertainty at the time we covered it.
The lesson is to jump in on occasion with a small bet on a little stock in a fast-growing industry.
2. CITY CHIC COLLECTIVE (ASX:CCX) : RETURN +4815.5%
LESSON: Don’t be afraid to make a bet on a small disruptor.
Industry: Retail
Tip date: 26/07/2012
Tip price: $0.48
Last price: $6.45
Radar Rating: Hold
City Chic Collective was called Specialty Fashion when we first covered it. We liked the stock because it had a strong franchise and was growing its sales. Then trouble hit with the stock weighed down by 1100 Australia-wide stores and too many brands.
In late 2018/ early 2019 the company kicked out its management and restructured, selling most of those stores and brands to Noni-B, which is now called Mozaic Brands (MOZ).
What has emerged is a slick online focussed retailer with a slimmer bricks and mortar presence of closer to 100 domestic stores targeting the relatively underserved market of plus size (14+) young women’s fashion in Australia, the US and Europe. The company is a leader in its market with an enviable digital presence.
The lesson is that when a company falls on hard times, don’t sell! Hold on because often there is light and in this case, fashion retail gold.<
3. NORTHERN STAR RESOURCES (ASX:NST) : RETURN +1167.4%
LESSON: Sometimes betting on one person can pay off.
Industry: Gold Mining
Tip date: 14/06/2012
Tip price: $0.83
Last price: $9.62
Radar Rating: Spec Buy
Think about this, when we first covered Northern Star, back in June 2012 (issue 19) the company’s market cap was just over $300m, it had one gold producing mine in the middle of WA - Paulsens – and it was led by a workaholic 37 year old Bill Beament, who has a background in underground mining contracting.
We were impressed with Beament’s mining ability, but not his company’s communications. Consequently, we saw an opportunity after it missed production guidance.
We could see that this company had strong fundamentals - $85m in cash; and incentivised management. Two very potent combinations.
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4. NICK SCALI (ASX:NCK) : RETURN +944.2%
LESSON: More often than not the time to buy is when everyone is selling.
Industry: Retail
Tip date: 18/10/2012
Tip Price: $1.40
Last price: $11.90
Radar Rating: Take $$$
This was the case with Nick Scali in October 2012, when the stock was trading at $1.40.</p>
Our view was that Nick Scali had the brand and balance sheet strength to take advantage of weak trading conditions.
We expected earnings would increase from its store rollout program, lower rents, and positioning itself across different price points. This would make it well placed to benefit when the inevitable upturn in the housing market occurred.
5. ZIP CO (ASX:Z1P) : RETURN +931.1%
LESSON: In a fast-growing industry if often pays to back more than one horse.
Industry: Technology
Tip date: 18/05/2017
Tip Price: $0.66
Last price: $6.81
Radar Rating: Hold
When we covered nascent shadow banking stocks, Zip Money as it was known then stood out along side Afterpay because it's model was based on disruption at the point of sale for retail.
The big market at play was millennials who were the great unbanked. Zip had a proprietary technology providing fast and easy online approval and was experiencing increasing adoptions from consumers and merchants.
Similar to Afterpay, which we preferred because Zip is more like a wallet. In the event if you bet on both you would have done exceptionally well and if you had only bet on one, their returns speaks for itself.
6. MACQUARIE TELECOM (ASX:MAQ) : RETURN +882.2%
LESSON: Patience often pays off with founder led companies.
Industry: Info tech
Tip date: 20/10/2011
Tip Price: $8.15
Last price: $77.70
Radar Rating: Take $$$
Macquarie Telecom’s success seems inevitable now, but when we first covered it we wore quite a bit of pain for over 12 months.
When we spoke to CEO David Tudehope a number of years ago he evinced frustration that his company’s transformation from a telecom reseller into a software as a service cloud operator wasn’t being reflected in a growing share price.
The company’s model is capital intensive, but because of its founders, MAQ has rarely raised capital and it has invested heavily in customer service.
That investment is still paying dividends, right now through growth because they’ve stopped paying them!
7. CODAN (ASX:CDA) : RETURN +885.3%
LESSON: If you get it wrong initially, hang in there (and even buy more).
Industry: Manufacturing
Tip date: 05/12/2013
Tip Price: $1.52
Last price: $13.81
Radar Rating: n/a
When we first covered this homegrown communications technology we were very impressed with its innovation and its products.
The company had one of the best-selling metal detectors in the world and a strong position in long-wave radio communication.
Then we were blindsided by a downgrade after positive news soon after its AGM.
That downgrade was due to a civil war and wet weather in Africa, where its gold detectors were running hot.
At the time of the downgrade, we said: too late to sell, “you are in it for earnings which should revert to their normal run rate”. They did that and more. Holding on in the face of a storm is essential. Sometimes you should buy more.
8. PILBARA MINERALS (ASX:PLS) : RETURN +687.3%
LESSON: If you don’t get it right the first time, you can get it spectacularly right the second, third, fourth, fifth...
Industry: Lithium
Tip date: 01/10/2020
Tip Price: $0.32
Last price: $2.48
Radar Rating: Hold
We were initially positive on lithium in late 2017 but then backed off two years later amid mounting losses and increasing cash calls.
Then we went back in with a vengeance in October 2020, which has paid off handsomely.
We continue to like the price outlook for lithium due to increasing demand from battery manufacturers, catering to the ramp up in Electric Vehicle sales.
PLS has a particularly impressive project because its production is increasing, following its opportunistic takeover of Altura’s neighbouring project. Its Pilgagoora mine has a long life low cost of production and big contracts with battery manufacturers.
9. COLLINS FOODS (ASX:CKF): RETURN +587.5%
LESSON: Hang in there when you believe in your investment thesis.
Industry: Retail
Tip date: 20/10/2011
Tip Price: $2.00
Last price: $12.39
Radar Rating: N/A
Collins was over ambitious when it listed, having been pumped up by private equity and sold. We liked the defensive nature of the business and held our noses. As it happened the company delivered a profit warning soon after listing, which was a disaster.
But also a buying opportunity. When you are confident in a long-term story, you need to either hold on and/or buy more.
10. EVOLUTION MINING (ASX:EVN): RETURN +518.8%
LESSON: Backing the man, not the ball has been a gold-winning strategy.
Industry: Gold Mining
Tip date: 18/03/2015
Tip Price: $0.72
Last price: $3.96
Radar Rating: Spec Buy
While Northern Star’s Bill Beament has been the mining expert, Evolution’s Jake Klein has been the gun at buying and selling gold mines, which befits his background as a banker.
We first covered Evolution Mining in early 2015 at $1 but actually upgraded a few months later when it got to around 70 cents.
In the end, the timing wouldn’t have made much difference, because the shares have performed spectacularly well.
If you are interested in learning more about the Blue Chip Stocks and how to invest in this area read more here.
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