Back then, the firm reported strong operational progress, a growing dividend, and had a high yield — a rare combination. And, to me, the stock was attractive with its price near 207p.

A small-cap stock to watch

The business divides its activities into two reporting segments. And in the trading year to 31 March, the discretionary fund management arm, Tatton, delivered around 84% of overall profit before tax. The remaining 16% came from Paradigm, which provides support services for independent financial advisers (IFAs).

Today, the shares change hands around 431p. And shareholders will have enjoyed pukka capital gains and a rising stream of dividends. However, in fairness, most of the stock’s rerating happened in 2021. It ended 2020 around 270p. But the market has now recognised the company’s strong trading through the pandemic and ongoing growth in earnings.

Meanwhile, today’s full-year results report underlines impressive ongoing organic growth in trading. And, looking ahead, City analysts expect earnings to increase by around 16% in the current trading year to March 2022.

The figures are robust. In the 12 months to end-March, revenue increased by just over 9.3% and adjusted diluted earnings per share moved almost 23% higher. A more than 35% increase in assets under management to £9bn drove the outcome. And the company attracted a further 668 IFA firms to its services, representing an increase of more than 12%.

Strong organic growth

There’s no doubt Tatton Asset Management is growing its business well and most of the progress has been organic. I like the strong balance sheet with its net cash position of around £17m. And there’s a multi-year record of steady growth in revenues, with the turnover translating into generally rising cash flow and earnings. And since starting shareholder dividend payments around 2018, the directors have been pushing them higher by chunky increments each year.

Meanwhile, the quality indicators impress me. The operating margin and returns against equity and invested capital are all running at mid-double-digit percentages. However, this year’s rerating means the small-cap stock isn’t the bargain I reported two years ago.

At a price near 431p, the forward-looking earnings multiple is around 26 for the current trading year. And the anticipated dividend yield is near 2.7%. The market has priced the company for growth, which is fine as long as growth continues near its current pace. But that’s a big ask.

Another risk for new shareholders now is that underlying operations will be exposed to cyclical effects from the wider economy. Right now, the markets are booming and the economy is in recovery mode. But things could change in the years ahead.

Nevertheless, Tatton Asset Management has demonstrated its resilience and growth credentials. And I’d put the stock on my watch list, waiting for dips and down-days in the markets to offer me a more attractive buying point.

Tom Rodgers: Sylvania Platinum

Sylvania Platinum (LSE: SLP) is one of those stocks I think will become increasingly strategically important. The platinum group metals the company processes at a low cost from its base in South Africa are used in practically every modern electrical appliance. Prices for rhodium and palladium have rocketed to near all time highs this year as demand outstrips supply.

With $55m cash and no debt, profits and earnings per share both doubling from 2019 to 2020, and investors in line for a special windfall dividend in 2021, this is one of the most obvious micro-cap no-brainers I’ve seen for years. 

Tom Rodgers owns shares in Sylvania Platinum.

Zaven Boyrazian: Tristel

Throughout 2020, medical centres around the world have adopted far more rigorous cleaning standards. In light of recent news, a Covid-19 vaccine may soon be ready.

However, even after this pandemic comes to an end, the increased disinfecting practises are likely to continue with stricter legislation. This creates a vast opportunity for Tristel (LSE:TSTL).

The firm manufactures infection prevention products that are widely used throughout hospitals. Given each of their products are consumables, they create a recurring income from existing customers.

As all products require FDA approval, Tristel faces little competition within a rapidly expanding market space.

Zaven Boyrazian does not own shares in Tristel.

Kirsteen Mackay: Tracsis

Tracsis (LSE:TRCS) is a UK tech stock that makes software specifically designed for the transportation industry, with railways being a main beneficiary. The company has been publicly listed for 13 years and its share price has risen approximately 1,075% during this time.

With the pandemic pausing travel, this has caused a sharp shock to the company, but it’s still winning government contracts. Although the Tracsis share price has seen extreme volatility this year, I think it will renew its growth trajectory once normality resumes. It has a £150m market cap. Its price-to-earnings ratio is 28 and earnings per share are 17p. 

Kirsteen does not own shares in Tracsis.

Edward Sheldon: Cerillion

My top micro-cap stock for November is Cerillion (LSE:CER). It’s a leading provider of cloud-based (SaaS) billing, charging, and customer management systems.

Cerillion appears to have plenty of momentum at the moment. In October, the group advised that trading in the second half of the year ended 30 September was strong. During this period, the company signed its largest-ever contract. Meanwhile, it said that its back-order book was at record highs and that it expects revenue and adjusted EBITDA for the year to be ahead of current market expectations.

At the time of writing, Cerillion has a market cap of under £100m, meaning there’s plenty of potential for growth. All things considered, I think this micro-cap stock looks pretty exciting.

Edward Sheldon has no position in Cerillion.

Rupert Hargreaves: Inspecs

I have my eye on UK-based designer, manufacturer and distributor of eyewear frames, Inspecs (LSE: SPEC).

The UK eyewear market is vast, and it’s only expected to continue to expand over the next few decades. This growth is projected to show through in Inspecs’ top line next year. Sales set to jump by a third in the next two years.

A cash-rich balance sheet could also hint at the prospect of large dividends from this consumer-focused business.

In my opinion, as Inspecs’ sales expand over the next few years, the stock has the potential to jump higher.

Rupert Hargreaves does not own shares in Inspecs.

Royston Wild: Bloomsbury Publishing

Bloomsbury Publishing is a share I’d buy today and hold for all time. It’s not just the eternal appeal of the Harry Potter franchise which makes this UK share a great long-term buy. I’m also encouraged by the huge profits potential of its move into academic publishing.

Bloomsbury’s shares recently soared to their most expensive since February on some blowout trading numbers. First-half earnings clocked in at twelve-year highs as sales of the publisher’s online books and e-books rocketed. The performance of its digital academic products was also impressive as institutions switched to remote learning due to the pandemic. As a consequence sales of these particular products surged by almost half year on year.

With organic sales rocketing, and its cash-packed balance sheet also creating chances for more profits-boosting acquisitions, I reckon Bloomsbury is a terrific buy right now.

Royston Wild does not own shares in Bloomsbury Publishing.

Kevin Godbold: MPAC

Global packaging company MPAC (LSE: MPA) aims to become a market leader in the “pharmaceutical, healthcare, food and beverage sectors.”

I think MPAC’s niche in those defensive sectors looks attractive. The business is bouncing back from the first wave of Covid-19 lockdowns. And in September the directors announced an acquisition in the US, followed in October by the relaunch of the MPAC brand along with a new corporate website.

City analysts expect earnings to resurge more than 50% in 2021. And with the stock near 400p, the forward-looking earnings multiple is just below 11. With growth on the agenda, I’d buy the micro-cap stock for November and beyond.

Kevin Godbold does not own shares in MPAC.

Jonathan Smith: Oxford Metrics

Oxford Metrics (LSE: OMG) is a UK based software and data analytics company, with offices worldwide. It has an asset management software arm called Yotta, that has been performing very well in recent times. I feel the business is well set to perform well even during an extended pandemic situation. The firm has no debt, and cash balances of over £14m as of Q2 2020. 

The nature of the business also means strong ‘annualised recurring revenue’, that was up 14.6% versus last year. This should aid continued growth in the future. The share price has doubled in value over the past 5 years.

Jonathan Smith does not own shares in Oxford Metrics.

Roland Head: Brickability

Recent results suggest the housebuilding market is enjoying a rapid recovery from the COVID-19 slump. One company I think could benefit from this strong demand is Brickability (LSE: BRCK).

This £115m firm sells bricks, roofing, and other building materials to housebuilders. Growth areas include heating, plumbing and doors. Chairman John Richards says that the company is seeing a “V shaped” recovery and the firm has just issued a solid set of half-year results.

The shares trade on just seven times 2021 forecast earnings and offer a well-covered 5% yield. I’d be happy to buy at these levels.

Roland Head does not own shares in Brickability.

Paul Summers: Churchill China

With things looking positive on the coronavirus vaccine front, my pick of the micro-cap stocks this month is ceramic tableware supplier Churchill China (LSE: CHH). 

Naturally, the £140m cap has seen its revenue, profits, and share price walloped by the virtual shutdown of the hospitality sector in 2020. However, I think the potential rewards now outweigh the risks.

While a full recovery won’t be immediate, earnings are expected to bounce back in 2021 as pubs, restaurants and hotels reopen. In the meantime, this high-quality, ‘family-owned’ company has cut costs where it can and remains debt-free.

Paul Summers owns shares in Churchill China.

Matthew Dumigan: Tatton Asset Management

Since flotation in 2017, shares in Tatton Asset Management (LSE: TAT) have been rather volatile. However, over the three years, the company’s share price has risen 45%, delivering a tidy return to investors. 

The company provides a range of on-platform only services ranging from discretionary fund management and compliance to mortgage provision. What’s more, the firm’s recent half-year results report was positive, with group revenue increasing by 12.6% year-on-year and adjusted operating profit rising by 21.9%.  

Ultimately, I’m impressed by the company’s earnings growth and I reckon Tatton can continue to deliver a strong performance in the years to come.  

Matthew Dumigan does not own shares in Tatton Asset Management.

G A Chester: Trans-Siberian Gold 

Trans-Siberian Gold (LSE: TSG) is a small but profitable miner with ambitions of becoming a premier mid-tier operator. Its strategy is to maintain a strong balance sheet, while both investing in growth opportunities and paying a base level of sustainable dividends through the commodities cycle. 

The base level’s set at around $3m a year (a 2.5% yield at the current share price), but the company regularly distributes more. This year’s interim dividend alone was $7m (5.9% yield). 

With its growth prospects and record of distributing surplus cash to shareholders, Trans-Siberian Gold is my top pick in the smaller companies space. 

G A Chester has no position in Trans-Siberian Gold.

James J. McCombie: Surface Transforms

Surface Transforms (LSE: SCE) recently won a contract worth £27.5m to supply an eighth global automotive customer with its high-performance carbon-ceramic brake discs. As a result, revenues should quadruple to £8m in 2022 versus 2020, and earnings per share should turn positive.

The high-performance brake market is worth £200m and growing, but a single supplier is dominant. Surface is now a credible alternative for manufacturers looking to diversify, and I think it will increase its market share significantly. 

Since electric vehicles need brake discs, Surface also looks good for the long-term, and I think it’s a great micro-cap stock pick.

James J. McCombie owns shares in Surface Transforms.

However, within the wider financial sector, I reckon fast-growing and big-dividend-paying Tatton Asset Management (LSE: TAM) looks like an attractive proposition and I’m tempted to buy some of the firm’s shares.

Impressive trading record

The company arrived on the stock market around two years ago, raising almost £52m via an institutional placing in the process. From that well-financed beginning on the public markets, Tatton has been winning business at a decent rate.

The firm earns its living providing services to directly authorised financial advisers in the UK, such as on-platform discretionary fund management, regulatory, compliance and business consulting services, and a “whole of market” mortgage provision. In other words, financial adviser outfits do what they do best – sell, and then they turn to the likes of Tatton as a way of outsourcing the execution of the service.

Things have been going well. During the firm’s two years of public life, revenue has moved more than 40% higher and earnings have shot up around 190%. The momentum continues with today’s full-year figures, which reveal that assets under management rose almost 25% compared to last year. The directors expressed their satisfaction and confidence in the outlook by pushing up the total dividend for the year by just over 27%.

Today’s share price close to 207p puts the forward-looking dividend yield at just over 4.1% for the trading year to March 2020. I think that yield is the key attraction of the share because over two years, the dividend will have grown by around 30%. I think it’s rare to find such a cracking rate of dividend growth alongside a high yield available right now and if the firm keeps up its rate of expansion, shareholders could be well rewarded in the future.

Growing fast

During the period, the number of member firms using Tatton grew by just over 30% and the number of accounts grew by almost 20%. Among other highlights, the firm won investment mandates from Tenet and Frenkel Topping during the year, as well as making strong gains in the mortgage and consulting businesses.

Chief executive Paul Hogarth said in the report that the investment mandate wins “show how compelling our investment proposition is to the wider market.” He explained that Tatton offers “a simple, lean operating model” that gives financial advisers and their clients “the best investment management products at a sector leading price point.”

Looking at today’s figures and the recent financial history of the firm, it’s hard to argue that Tatton’s strategy isn’t working. It seems to me that the financial advisor sector is embracing the company’s service, and I’m tempted to pick up a few of the firm’s shares to hold and see what happens.

You cannot blame them, in some respects. After all, the firm shocked the market with not one but two scary updates at the back end of last year, the shares first dropping on it warning of “challenging” market conditions for its Civil Engineering division in October. It plunged again in December after warning that profits would be “weaker than expected” for the final quarter due to an adverse product mix and the impact of sales timings at its Coated Technical Textile unit.

News that chief executive Brett Simpson had defected to Fenner in the run-up to the Christmas period added to jitters as to how the company can reverse its troubles. Consequently it saw its market value shrink by almost half in the final three-and-a-half months of 2017.

I reckon it’s about time share selectors took a close look at the business again, however, as there remains plenty to be optimistic about. Low & Bonar managed to keep growing revenues in the first quarter despite difficult market conditions persisting. And with the company undertaking a number of self-help measures, from solving production problems at Coated Technical Textile to introducing fresh cost saving initiatives, the news flow is likely to become more positive during the second half of the year.

Yield charges to 6%

City analysts certainly remain largely upbeat over Low & Bonar’s profits outlook and they are estimating earnings growth of 4% in 2017 and 8% next year.

These readings may be reassuring if not exactly spectacular. The same cannot be said for the London firm’s dividend prospects, however, due to the colossal dividend yields it currently packs.

This year a 3.1p per share reward is being predicted, up from the 3.05p dividend of 2017. This yields an eye-watering 5.8%. Moreover, the anticipated 3.3p payout estimated for next year moves the dial to 6.2%.

Investors concerned about Low & Bonar’s ability to meet these projections should revenues worsen again can take heart from the fact that anticipated dividends are covered 2.2 times by predicted earnings, comfortably above the accepted safety terrain of 2 times.

With it also sporting a dirt-cheap forward P/E ratio of 8 times, I think it’s well worth checking out today.

Dividends rocketing higher

Tatton Asset Management (LSE: TAM) is another big yielder that can be picked up for almost nothing right now.

I noted in October the electric fund inflows that the AIM-quoted business is enjoying, and latest trading details released last week confirmed that it continues to make terrific progress — assets under management leapt by £1bn year-on-year in the 12 months to March 2018, it said, to £4.9bn.

City analysts believe Tatton should deliver earnings growth of 22% and 21% for fiscal 2019 and 2020 respectively, leaving the business dealing on a forward PEG reading of just 0.9 and also leading to predictions of chunky dividend improvements. A predicted 6.5p per share reward for last year is expected to chug to 7.8p this year and to 9.2p for next year, resulting in meaty yields of 3.5% and 4.1% for these respective years. I reckon Tatton is a top stock for those seeking brilliant income flows on a tight budget.

However, even though this business is relatively young, it is growing like a weed, and at its current speed, it won’t be long before it graduates off AIM and moves into the big league. 

The results are in 

Today Tatton published its maiden interim results for the six-month period ended 30 September following its IPO in July. 

During the period, discretionary assets under management expanded 15% (since March 2017), and AUM grew by 33% year-on-year. Growth in AUM helped the company expand revenue by 31% to £7.3m and adjusted earnings before interest and tax lept by 56% year-on-year. 

Due to the costs associated with its IPO, Tatton reported a profit before tax of only £0.5m for the period, but going forward, IPO costs should not be repeated indicating strong profit growth in the years ahead. 

As well as robust underlying earnings growth, the firm reported a cash balance of £10.5m at the end of the period. 

Growth ahead

Tatton’s solid results have enabled management to announce today an inaugural interim dividend of 2.2p per share. This looks as if it could be a sign of things to come. 

The group is a relatively unique business as it offers on-platform-only discretionary fund management, regulatory, compliance and business consulting services to investment advisors across the UK. These services allow investment advisors to lower costs and concentrate on clients’ needs, rather than focusing on time-consuming, costly compliance issues. 

As more advisors flock to the firm’s offering, City analysts expect Tatton’s earnings per share to grow by 6% this year, and 19% for the fiscal year ending 31 March 2019. Considering the young age of the company, and the growth reported today, I believe that these could be conservative forecasts. Based on the current City estimates, however, the shares are trading at a forward (YE 31 March 2018) P/E of 20.4, which seems to me to undervalue this high-growth business. 

Reach for the stars

Over the past 12 months, shares in Gateley Holdings (LSE: GTLY) have charged higher by 55% as the law firm has improved its offering through acquisitions. Today the company announced that revenue for the six months ended 31 October grew 9.8% and adjusted EBITDA expanded 6.3%. Substantial investment in its client offering held back the group’s overall performance. 

Still, for the full year City analysts are predicting earnings per share growth of 13%, followed by an increase of 7% for the fiscal year ending 30 April 2019. On the back of these forecasts, the shares are trading at a forward P/E of 15.8 falling to 14.9. Considering the company’s steady earnings growth, a mid-teens multiple seems to me to be suitable for the shares. 

I believe the outlook for the group is bright because the market for professional services (it provides legal advice to the financial, corporate and property sectors) has only grown for the past few decades, and it does not look as if this trend will end anytime soon. And as financial sector regulation becomes more complex, it should be able to capitalise on this opportunity.

As well as steady growth, it also supports a dividend yield of 4.2%.

Not heard of it? The company offers discretionary fund management (DFM) and IFA and mortgage support services, and things sound like they’re going well. Funds under management on its DFM platform rose to £4.44bn, from £3.85bn at 31 March — and fund inflows are apparently running at more than £80m per month.

The firm’s IFA services arm, Paradigm Partners, has seen membership rising to 356 firms (from 352 in March), with Paradigm Mortgage Services seeing membership up to 1,143 firms.

Tatton doesn’t have much public history, having only floated on AIM as recently as July 2017, but analysts are already predicting good things.

Attractive valuation

The forward P/E for the end of this year might look a little high at around 21, but forecast rises in earnings per share would drop that to 17 by 2019, and indications of a strongly progressive dividend suggest a 2019 yield of 4.1%.

If that comes off, it will be a cracking start to life on the stock market.

Chief executive and founder Paul Hogarth spoke of “the increasing demand for a low cost DFM service to the mass affluent market place served by the IFA sector“, and that looks to me to be the company’s main attraction — it’s offering a range of closely related services which should feed into and support each other.

Despite the economic uncertainty we currently face (or perhaps even because of it), I reckon Tatton’s services should be in demand from its targeted clientele sector in the coming years.

Cash from rubber

Turning to a wildly different sector, I’m quite taken by the fundamentals exhibited by Anglo-Eastern Plantations (LSE: AEP). The company produces palm oil and rubber from plantations across Indonesia and Malaysia, and both of those commodities are in huge demand — though ethical issues regarding the destruction of rain forest in places like Borneo might put some investors off.

Over the last 12 months, the Anglo-Eastern share price has soared by 85% to 870p, with some of that surely due to impressive interim results. 

Revenue in the half climbed by 70% to $146.9m, with pre-tax profit up 83% to $31.6m and earnings per share (EPS) more than doubling to 46 cents. Total net assets at 30 June stood at $470.6m (approx £357m) — and that’s more than the firm’s market capitalisation of £346m, so the shares are trading at a discount.

Discounted valuation

On the P/E front, the shares are looking attractively valued to me, despite their impressive appreciation over the past year. With EPS expected to grow by 83% this year, we’re looking at a multiple of only 7.2 and a PEG ratio of a mere 0.1 — growth investors usually get excited by anything under 0.7, but we do have to temper this with Anglo-Eastern’s erratic year-on-year earnings.

The business of investing heavily in new plantations and not seeing profit from them until a few years later would account for some lumpiness in earnings, but that really shouldn’t matter to long-term investors.

The company has several biogas plants up and running now which provide electricity that it will sell to the national grid, in Bengkulu, Kalimantan and North Sumatra, and that will add a little to the bottom line.

There could be environmental hurdles ahead, but the shares look good value to me.

The financial services star therefore remains locked at recent two-month highs following a stellar run in the lead-up to today’s release. And I would not be surprised to see it resume its upward path in the very near future.

Tatton, which provides on-platform discretionary fund management (or DFM) and IFA support services, advised that trading came in line with expectations between April and September. At its on-platform DFM division funds under management stood at £4.44bn at the end of the period, up from £3.85bn six months earlier.

The result prompted chief executive Paul Hogarth to declare: “This growth is further evidence of the increasing demand for a low cost DFM service to the mass affluent market place served by the IFA sector, which the group is ideally placed to capitalise on.”

The Cheshire-based business has witnessed terrific fund inflows at a run-rate exceeding £80m per month, although the performance of its DFM division was not the only cause for celebration. Indeed, member numbers at Tatton’s Paradigm Partners IFA services arm increased to 356 IFA businesses as of September from 352 in March. And at Paradigm Mortgage Services the number of mortgage firms swelled to 1,143.

Dividends dancing higher?

Against this backcloth it is hardly a shock to find brokers predicting great earnings growth at Tatton in the present year and beyond.

For the period concluding March 2018 the firm is predicted to deliver earnings growth of 6%, and surging business flows are expected to drive growth to 19% in fiscal 2019. I reckon a forward P/E ratio of 20.4 times is fair value given the serious momentum seen across Tatton’s operations.

And there is a lot for dividend seekers to sink their teeth into, these predictions of meaty profits expansion being predicted to feed into very-healthy yields. An anticipated 6.5p per share dividend for this year yields a terrific 3.5%, while a projected 7.8p dividend for 2019 yields 4.1%.

Gobble up Greencore

I also reckon those seeking hot dividend expansion could do a lot worse than check out Greencore (LSE: GNC).

City analysts are expecting earnings to have fallen 2% in the period ending September 2017, although this is not predicted to have put paid to Greencore’s progressive dividend policy — a reward of 5.9p is currently anticipated, up from 5.47p last year.

And assisted by an anticipated return to earnings expansion in the current year (an 11% increase is projected), shareholder rewards are expected to rise to 6.3p. As a result the yield clocks in at a decent 3.4%.

Greencore continues to witness solid demand growth in both the UK and US, with the ‘Food To Go’ foods segment driving business at home, and recent acquisition activity Stateside boosting revenues there. As a result sales on a pro forma basis popped 11.8% higher during quarter three of the last fiscal year, to £636.5m.

I reckon Greencore is a great pick right now given its impressive sales outlook, and particularly in light of its ultra-low forward P/E ratio of 10.8 times.