Under the Radar Report

ASX takeover targets for 2022

29 July 2022
Richard Hemming

In the past few months EIGHT stocks we’ve recommended are in the process of, or have been taken over. Over one in five of the stocks we’ve tipped have been acquired in the past decade, which has resulted in big capital gains for subscribers. The trend has been accelerating. More to the point, any of the 15 stocks we cover in depth this week could be a takeover candidate.

Let’s look at the list of Small Caps Under the Radar Report has recommended that are under offer or have been taken over in the past few months:

1. Tassal (TGR) by Canadian owned Cooke Inc.

2. Alliance Aviation (AQZ) by Qantas Airways.

3. Infomedia (IFM) by three private equity firms.

4. Senex Energy (SXY) by Korean Posco and Gina Rinehart.

5. Reckon (RKN) partial sale of business to UK Access group.

6. Centrepoint Alliance (CAF) by ASX listed Diverger (Hub24 20% stake).

7. Genex Power (GNX) by a consortium led by Atlassian co-founder Scott Farquhar.

8. Maca (MLD) by Australian owned Thiess.

Only this week, one of the stocks that has been on our Best Buys list, the contractor Maca (MLD) has been bid for by Australian competitor Thiess. Its stock is now up 30% this month. Then there is the bid for Genex Power (GNX) boosted 33% by a bid led by Atlassian co-founder Scott Farquhar.

What’s driving this?

A period of low interest rates for sure. The bigger point is inflation, which drives up prices of real assets like businesses and in particular the assets that those businesses contain. I’m talking about assets that were built at times when funding was cheap. Fast forward to today and they are increasingly expensive to replace.

Corporates are desperate for growth. Private equity is desperate for deals. Where do they go? Small Caps! When do they want them? Now!

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Generating big gains

Some of the higher quality small cap stocks are in the process of being taken over, like Infomedia (IFM) by private equity, or Alliance Aviation (AQZ) by Qantas (QAN), or have grown so large that we no longer really count them as small caps, like Elders (ELD), where our early recommendations back in 2012 have made more than 20 times at current prices.

Luckily, however, because there are plenty of stocks listed on the ASX, most of which are in the tail, i.e. small, we have come up with some really high quality Small Caps that stand to generate big gains when sentiment once again swings positive.

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ABOUT THE AUTHOR

Richard Hemming

Richard Hemming (r.hemming@undertheradarreport.com.au) is an independent analyst who edits www.undertheradarreport.com.au, which provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.