We all know that the financial press has a tendency to focus on popular blue-chip stocks, generating a plethora of articles, analysis and commentary on a daily basis, covering the larger companies the Great British public is most likely to be interested in.
Hidden gems
That’s all well and good if you’re a risk-averse investor unwilling to fish outside the FTSE 100 or even FTSE 250. But what about the rest of us? How are we to supposed to unearth the hidden gems that could go on to become tomorrow’s big winners without adequate coverage and commentary?
Don’t worry, that’s what we’re here for at The Motley Fool. Here, you’ll find analysis, opinion, and commentary on a wider range of UK-listed companies, no matter how big or small. Concerning the latter, it’s often these smaller companies than can generate the biggest returns, with rich pickings to be had from little-known firms flying under the radar of most retail investors.
Identification microchips
For instance, I doubt that many of you will have read much about Animalcare Group (LSE: ANCR). And yet this AIM-listed veterinary medicine provider has been supplying a wide range of animal health products for more than a quarter of a century, from identification microchips and pharmaceuticals, to pet welfare products and practice equipment.
For the 2017 financial year, the York-based group delivered a 7.9% increase in revenues to £15.87m, with underlying operating profits rising 11.8% to £3.57m, compared to £3.19m for FY2016. The Licenced Veterinary Medicines arm of the business had a particularly strong year, with a 17.2% leap in revenues to £10.8m, mainly due to export sales which soared 60.1% to £1.67m.
Reverse takeover
But by far the highlight of the year was the acquisition of European animal health business Ecuphar. The £134m reverse takeover is likely to be hugely transformational for the group, providing it with enhanced scale and capabilities to create a pan-European animal health platform from which to accelerate growth.
The deal has expanded the group’s direct sales platform to cover seven countries (compared to just one country previously), with its international reach now covering 50 export markets, as well as greatly increasing the depth and diversity of its licensed veterinary medicines product range.
AIM Transaction of the Year
It seems I’m not the only one that thinks the acquisition was a shrewd one, with Animalcare winning the ‘Transaction of the Year Award’ at the 22nd Annual AIM Awards 2017 for its deal to merge with Ecuphar. The award is given to companies that have been “transformed by a single financial or commercial transaction during the period under review and thereby creating significant shareholder value.“
As an enlarged group Animalcare has certainly transformed itself into a growing, highly cash generative, dividend-paying company with a solid pipeline of new products and multiple cross-selling opportunities, and as such a P/E rating of 18.5 doesn’t seem too demanding to me at all.