While the FTSE 100 has produced a net movement of pretty much zero in the past 12 months, it’s been a great year for some small cap stocks. I’ve been looking at three (all listed on AIM) whose prices have climbed, and asking if there are further gains to come:
Precious
Shares in Jubilee Platinum (LSE: JLP) have more than trebled in price in the past 12 months, to 4.4p, with the bulk of the gain coming since the middle of July — and that’s all happened while the price of platinum has been falling! So what’s the story?
The company has been working on a new platinum surface processing project, which CEO Leon Coetzer has described as “transformational”, with plans for processing an estimated 4.4 million tons of platinum-containing surface material. The big boost came on 16 July when Jubilee announced the sale of its non-platinum Middelburg assets for £5.8m which would help fund the surface processing project.
Then on 4 August we heard that the debt portion of the funding is pretty much secured with “a major financial institution”. The times ahead could be exciting.
Mature drugs
Alliance Pharma (LSE: APH) shares have been climbing ahead of interim results due on 9 September, gaining 73% to 59p since this time last year — with most of the rise coming since mid-June. A pre-close update in July, from the company that specialises in acquiring “mature” pharmaceutical products and then manufacturing and marketing them, indicated first-half sales of around £22.8m and told us that Alliance “continues to explore a number of acquisition opportunities“.
Whether that acquisition plan justifies the current share valuation is uncertain, though, as we’re now looking at a forecast P/E for 2015 of more than 17, with only single-digit EPS growth expected this year and next and dividend yields only around 2%. On that kind of valuation, I can’t help feeling the shares are high enough at the moment.
Telecoms success
For a really stunning rise, we only need to look at AdEPT Telecom (LSE: ADT). Its shares have doubled over the course of a year to 249p, which is good enough on its own — but they’ve 12-bagged in five years!
AdEPT provides business telecommunications services, and it’s a strategy that has paid off in the form of double-digit earnings growth every year for five years in a row and with the same forecast this year. At the same time, the dividend yield has gone from nothing in 2010 to 3.4% last year. The big question is when that growth is going to slow, especially as this is a small company in a very big market — and EPS growth for 2017 is currently forecast at only 2%.
At market-average P/E ratings the shares don’t look overpriced, but for me the rapid price growth is in the past now.