|Summary: Our “outperform” rates stocks have given up some ground in recent weeks, but overall the top 10 are still well ahead of the market. Indeed, so far they have generated an average total return of 42%. But there have also been a few clangers, generally reflecting specific company issues.|
|Key take-out: Material changes in the ratio between cash flow and profit from year to year can often be a useful early indicator for non-financial companies.|
|Key beneficiaries: General investors. Category: Shares.|
The end of the year shouldn’t only be associated with merry-making and presents. It should also be a time to review your investments, particularly after what can only be described as a trying few weeks.
The S&P/ASX Small Ordinaries Index has given up around 7% since November (with the top 200 stocks down around 2%), and one-off disasters such as the Forge Group (FGE) rout are still ringing in the ears of shell-shocked shareholders.
But in small caps, it’s all about having big winners that can neutralise negative surprises: gaming systems provider eBet (EBT) has more than doubled since our “buy” call, while emerging copper producer Tiger Resources (TGS) has lifted 73%, and mining contractor WDS (WDS) has climbed 65%.
Don’t forget the top 10 stocks with our “outperform” recommendation have generated an average total return of 42% so far.
However, not all the stocks we like have done so well. The 20% average gain on our “outperform” rated stocks earlier on has halved in the past few weeks. But our buy calls, which still outperform the wider market, are meant to deliver double-digit returns over a year – not a few months.
Indeed, there are nine that are behind the broader market by 10% or more, and the close of the year is the perfect time to do a stress test on the laggards.
Stressing the stress test
The Forge debacle has taught us a thing or two: The smoking gun was in its full-year result in August, when the engineering contractor reported a 28% surge in net profit to a record $62.9 million but an 80% decline in cash from operations to $17.9 million.
If anyone had caught that anomaly and dug a little deeper, it would have revealed liquidity problems in the business and the fact that it was booking a lot of profit well ahead of receiving the cash.
Uncapped 100 stocks with the lowest cash flow to net profit conversion
|Code||Name||CPS/EPS* FY13 (%)||CPS/EPS FY12 (%)||Change WC** (%)||Total debt/equity (%)||Est FY13 P/E (x)|
|CWP||Cedar Woods Properties||-40.66||96.52||-37.94||19.63||11.70|
|CCP||Credit Corp Group||32.56||145.82||0.29||6.82||12.04|
|CCV||Cash Converters International||36.49||10.98||-41.19||29.35||11.48|
|* Operating cash flow per share to earnings per share **Change in working capital from FY12 to FY13|
|Source: Eureka Report, Bloomberg|
Material changes in the ratio between cash flow and profit from year to year can often be a useful early indicator for non-financial companies and is easy to work out from a company’s balance sheet.
The ratio should generally be above 100% as depreciation and amortisation is taken out of profit but not cash flow. Investors should be asking questions when the ratio strays too far below that point, especially if this has not been the case before.
The good news is our “outperform” recommendations comfortably meet this rule. This is true even for mining services companies NRW Holdings (NWH), LogiCamms (LCM) and WDS (WDS). NRW’s operating cash flow to operating profit ratio stands at 159%, while LogiCamms and WDS come in at 139% and 255%, respectively.
This means they are unlikely to deliver a similar nasty surprise as Forge did, although this doesn’t make them immune from a profit downgrade given the slow pick-up in capital spending by resource companies and the competitive bidding environment. Investors should be cognisant that the sector is only for the risk tolerant, although I continue to see value in the three names.
Wooden spoon goes to resources
Worst performing Uncapped 100 stocks with an outperform recommendation
|Name||Code||Article date||Article name||Total rtn* (%)||Alpha** (%)|
|Horizon Oil||HZN||17-Jul-13||Five bargains for under a buck||-18.62||-27.24|
|Beadell Resources||BDR||28-Aug-13||Short-selling gold signals||-20.81||-25.95|
|YTC Resources||YTC||9-Oct-13||Xmas sale starts early for small caps||-23.08||-25.84|
|Universal Biosensors||UBI||4-Sep-13||Smalls in sweet spot||-21.32||-24.40|
|Thinksmart||TSM||21-Aug-13||Biggest smalls earnings surprises||-18.31||-23.46|
|Starpharma Holdings||SPL||17-Jul-13||Five bargains for under a buck||-12.23||-20.85|
|Silex Systems||SLX||3-Jul-13||Why a dog can be an investor's best friend||-3.02||-17.12|
|Newsat||NWT||3-Jul-13||Why a dog can be an investor's best friend||-2.53||-16.64|
|M2 Telecommunications Gp||MTU||10-Jul-13||Big expectations for small caps||-3.60||-14.02|
|*Total return (including dividends) since article was published **Alpha = difference in performance between stock and ASX All Ords|
|Source: Eureka Report, Bloomberg|
But it is not our mining services calls that are giving the most grief. It is the resources names like Horizon Oil (HZN), Beadell Resources (BDR) and YTC Resources (YTC) that are at the bottom of the performance table. They are lagging the ASX All Ordinaries Index by over 25% each as they struggle with a variety of issues.
Horizon has fallen out of favour as shareholders’ dividend hopes were dashed and as the oil price trended lower over the last several weeks.
The market was expecting to hear management give a more concrete guidance on when the emerging oil and gas producer would start a payout policy, but management backed away due to a shutdown of the Maari field in New Zealand that will see a $13 million revenue deferral and $7 million in upgrade costs.
But Horizon remains one of the better valued fledging oil producers and the stock should be trading at 60 cents, not 30-plus cents. It should get there once investors become more confident about the ramp-up and sustainability of output from its Beibu field in China and the restart of Maari.
Oil prices are also likely to rebound in the near term. November has historically been the weakest month for crude, while the first half of the calendar year tends to see the strongest gains.
Gold miner Beadell Resources is also in the dog house. There is nothing wrong with the company – the problem is the gold price, which has been on a downtrend since August as it shed 14% of its value.
There are real concerns that gold will retest an important support level at $US1,200 an ounce in the coming weeks, if not days. If gold falls under that psychologically important level, it will likely fall to $US1,000 an ounce.
The upside for Beadell is that its flagship Tucano gold mine in Brazil can probably survive when an ounce of gold fetches around $US1,000, as its cash cost is hovering round $US600 an ounce. The question is where gold will end up if it does breach $US1,000, and that is the key reason why investors have shied away from the stock.
If you believe gold will hold above $US1,000 an ounce and you want equity exposure to gold, Beadell is arguably the best stock to hold. Otherwise stay away.
Diversified metals miner YTC Resources (YTC) rounds up the worst three on our “outperform” list, with the stock re-testing its three-month low of 20 cents.
Investors have been quick to dump the stock after its latest drill result at Nymagee North failed to find the mother lode of base metals. Expectations were high as the down-hole electromagnetic (DHEM) test indicated a large body of mineralisation.
Management believes there is still a good chance of finding the ore body and that the body may be deep and not wide.
However, investors are in no mood for disappointments, and have decided to sell first and ask later, especially since YTC is also exposed to gold through its Hera project, which will start commercial production next year. YTC also mines for copper, lead and zinc.
While exploration results will impact on the stock, I like YTC because the Hera project is fully funded and the company is transitioning from an explorer to a producer. The “corridor” between Hera and the adjacent Nymagee projects in New South Wales is also highly prospective, and I suspect we will see more good news from the ongoing drilling program.
But you shouldn’t think that all our “buy” calls have the same risk profile. Resource and resource-related stocks were always going to be more volatile compared to other stocks we are bullish on, such as packaging company Colorpak (CKL) and automotive services and products company AMA Group (AMA).
The sell-downs of medical device developer Universal Biosensors (UBI), consumer financing solutions company ThinkSmart (TSM) and biotech Starpharma Holdings (SPL) are primarily driven by investors looking to free up cash.
The issues for investors is that there are around $8 billion worth of small cap initial public offerings, a number of capital raisings have been announced since September, and fund managers are selling off some stocks to raise cash to participate in these events.
The good news is that nothing has fundamentally changed for the three stocks. If anything, ThinkSmart has confirmed that its turnaround remains on track and that it will start paying a dividend a year sooner than most were expecting.
Starpharma also recently released good news. The preclinical study using its dendrimer formulation in cancer blockbuster drug docetaxel yielded positive results, but that was not enough to save the stock from falling 20% since October.
Universal Biosensors is the only one that gave investors good reason for its price pause. The launch of the company’s anti-coagulation testing device that it is developing with Siemens has been pushed into the first half of 2014 from the end of 2013.
The three stocks represent very good value and I reiterate my “outperform” call on them in anticipation that their share prices will rebound over the next 12-months.
The final three underachievers have company specific issues that are dogging their share prices. Laser developer Silex Systems (SLX) is weighed down by worries that the two uranium enrichment plants using its technology will not be built due to the poor sentiment surrounding nuclear power.
The spot uranium price was trading close to $US50 a pound in September, but has given up a quarter of its value since.
However, the uranium price seems to have found a floor around $US34 a pound and is trading around $US36 per pound currently.
The proposed Paducah plant in the United States also took a big step forward to becoming a reality last week, although the truth about investing is Silex is that it is a “slow burn”. Investors will need to be patient as the company will need a few years to live up to its potential.
It is anyone’s guess when the final investment decision for Paducah in Kentucky or the Wilmington plant in North Carolina will be given by Silex’s joint-venture partner GE-Hitachi Global Laser Enrichment (GLE).
The plants themselves take a few years to build, and Silex’s new solar panel system will take a similar amount of time to prove that it can be a commercial success. Buying such stocks is always a high-risk endeavour as Silex’s future is almost a binomial outcome. It needs to get at least one of its products to become an industry standard if the stock is to be worth anything.
I fear local investors are not patient enough to back what could be one of the greatest Australian innovations.
Satellite hopeful Newsat (NWT) is one I am having the most doubts on among the “outperform” calls. The company’s surprise revelation about the funding facility it obtained with Orbital Capital gives me cause for concern as the debt is supplied on what I consider “loan shark” terms.
The fact that the deal, which I believe is material to the value of the company, wasn’t announced earlier makes me wonder what else management is not saying.
However, the launch of its satellite in 2015 appears to be on track. Now that the funding is in place, the successful launch of the satellite is really out of management’s hands. If the satellite makes it to orbit (and works), the stock will be strongly re-rated.
For this reason, I will keep the “outperform” recommendation, at least for now; but it is one that you need to keep your eye on.
Meanwhile, telecommunications reseller M2 Telecommunications Group (MTU) is on the out with investors, with the stock trading at a five-month low of around $5.50.
The weakness is not specific to M2. Its peers, such as iiNet (IIN) and TPG Telecom (TPM), have also been under pressure since November. The drop in their share prices isn’t particularly surprising either as these stocks have done very well.
While the All Ords has delivered a 17% total return in 2013, M2 has generated returns that are more than double the broader market.
I believe M2 will find favour with investors again due to its attractive valuation and strong track record. Corporate activity also cannot be ruled out.
Think big, go smalls!
Uncapped 100 - Australia's most interesting small cap stocks
|Small cap stocks covered by the Uncapped team|
|Code||Name||Rationale||Market cap ($m)||Total return 1-year (%)||Sector (GICS)|
|NHF||NIB Holdings||Only listed health insurer. Widely held. Good performer.||1,058.00||26.09||Financials|
|MTU||M2 Telecommunications Group||Amazing growth story and well run company. High free float and strong insto support.||1,031.46||59.07||Telecommunication Services|
|MMS||McMillan Shakespeare||One of the best performers since the GFC, but ongoing risk of change to FBT rules will hang over the company.||922.61||-3.13||Industrials|
|GEM||G8 Education||Only listed childcare operator. Acquisition strategy paying off with stock delivering solid gains.||920.43||122.23||Consumer Discretionary|
|ARP||ARB Corp||Well covered but good candidate for core holding due to quality management.||863.25||14.11||Consumer Discretionary|
|AAD||Ardent Leisure Group||Widely held stock. Earnings more defensive than anticipated. Good yield. Potential core holding.||802.01||49.94||Consumer Discretionary|
|MRM||Mermaid Marine Australia||Its strategically located facility on WA coast gives it a key advantage over competition in servicing Gorgon & Pluto projects.||761.94||4.71||Industrials|
|BGA||Bega Cheese||Corporate interest in Australian food companies makes the cheese maker worth following.||693.01||149.06||Consumer Staples|
|AUB||Austbrokers Holdings||The insurance broker is a strong performer. Widely held and well liked by small cap investors.||690.92||49.67||Financials|
|SRX||Sirtex Medical||A shining star in the biotech space and one of the best performing stocks in 2012. Great product (liver cancer treatment) and bright outlook.||666.29||2.18||Health Care|
|RFG||Retail Food Group||Owns a number of well know franchise brands. Widely followed by instos.||617.92||59.31||Consumer Discretionary|
|SGN||STW Communications Group||One of few companies able to benefit from online shift. Widely held and good insto support.||595.65||45.04||Consumer Discretionary|
|BDR||Beadell Resources||Will be a very big FY14 for miner as it has to prove it aims to produce 200,000 ounces of gold a year.||531.76||-37.73||Materials|
|AMM||Amcom Telecommunications||Well covered junior telco but good candidate for core holding.||503.79||54.8||Telecommunication Services|
|CWP||Cedar Woods Properties||Property developer with good ROE and earnings growth track record.||494.75||61.39||Financials|
|TOX||Tox Free Solutions||Widely held stock in the waste solutions business. Its unique because it operates in a defensive-growth niche.||463.68||24.04||Industrials|
|SEA||Sundance Energy Australia||Analysts have a favourable take on the oil & gas explorer, but stock is still under radar of most. Sundance provides exposure to prospective Eagle Ford shale.||460.30||23.6||Energy|
|TGR||Tassal Group||Salmon farmer is finally turning a corner with an improved harvest strategy and growing demand for product.||449.04||134.36||Consumer Staples|
|RCR||RCR Tomlinson||Good first half FY13 result and outlook, but will its fortunes change this year with the mining capex slowdown?||426.49||86.4||Industrials|
|MYS||MyState||Well regarded and could make good alternative to bank stocks. Has good yield and earnings growth over past few years.||418.45||42||Financials|
|NXT||NEXTDC||The cloud computing company is an IT sector darling. Fairly widely held and followed.||411.63||12.63||Telecommunication Services|
|CCP||Credit Corp Group||Strong price run attracted good investor interest. Leveraged to any rise in loan defaults. Not well covered by press.||405.96||17.73||Industrials|
|BRU||Buru Energy||Substantial size but not often covered by press. Widely held with good insto support.||396.83||-51.81||Energy|
|ACR||Acrux||One of the most successful Australian biotechs in recent history. Widely held by instos.||388.83||-16.1||Health Care|
|MYX||Mayne Pharma Group||Sizeable generic drug maker with interesting board members.||385.97||114.06||Health Care|
|HZN||Horizon Oil||One of better regarded small energy stocks that doesn't receive much media attention.||379.94||-34.22||Energy|
|SLX||Silex Systems||Its uranium enrichment technology could become one of Australia's best innovations given its potential to change the nuclear power industry.||367.84||-29.41||Information Technology|
|MOC||Mortgage Choice||Has a good track record and is leveraged to any housing recovery. The stock is also liquid with good insto support.||363.91||85.48||Financials|
|IPP||iProperty Group||Worth watching as it is trying to be the REA Group of Asia.||352.82||126.16||Information Technology|
|BNO||Bionomics||One of the larger cancer treatment developers in this market.||350.34||171.43||Health Care|
|NWH||NRW Holdings||One of the better regarded mining & civil contractors with good track record in delivering on projects.||346.52||4.43||Industrials|
|UXC||UXC||Company has turned corner and enjoyed re-rating. What's next?||344.59||8.18||Information Technology|
|CCV||Cash Converters International||Strong performance is attracting investors. It's Australia's only listed pawn shop and pay day lender.||343.17||-18.53||Consumer Discretionary|
|TGA||Thorn Group||One of few retail stocks that is performing well despite its flat outlook for FY14. The Radio Rentals chain owner is also well supported by instos.||340.97||26.7||Consumer Discretionary|
|AEU||Australian Education Trust||Well performing childcare centre property owner. Good yield story and outlook.||311.70||33.11||Financials|
|VOC||Vocus Communications||Telecom stocks are in favour but Vocus is one of the least covered||286.77||125.74||Telecommunication Services|
|GXL||Greencross||Acquisitive veterinary group. Good profit growth and share price performance, but gets little press.||286.39||151.01||Health Care|
|RKN||Reckon||Fierce competition for cloud base accounting software puts it in firing line.||284.39||-4.39||Information Technology|
|GID||GI Dynamics Inc||Largely forgotten by investors but could attract attention this year as it looks to gain US approval to use its intestinal liner on diabetics.||274.93||11.9||Health Care|
|SHV||Select Harvests||Noteworthy for turbulent past and exposure to soft commodity market.||273.47||262.81||Consumer Staples|
|RIC||Ridley Corp||High corporate interest in the sector and the shrinking pool of agri listed stocks make Ridley worth following.||266.26||-13.21||Consumer Staples|
|IMF||Bentham IMF||Litigation funder is unique stock. Stock not liquid but its outlook appears promising given the number of potential class action lawsuits.||265.13||7.48||Financials|
|TFC||TFS Corp||The sandalwood products company offers exposure to both the agri and cosmetics industry. It will start commercial harvest this year.||252.53||106.64||Materials|
|TGS||Tiger Resources||Future lies in its Kipoi copper mine expansion in the Congo but miner is fully funded with DRC govt holding 40% stake in tenement. Next 12mths will be interesting.||247.93||14.29||Materials|
|AJA||Astro Japan Property Group||Strong leverage to Japanese economy makes this an interesting stock to watch.||239.95||26.96||Financials|
|NAN||Nanosonics||A successful medical tech story. Should be close to turning in maiden profit with its disinfection device.||231.28||77.78||Health Care|
|NWT||Newsat||Potential large cap if it can launch its own satellite in 2015.||230.67||-25||Telecommunication Services|
|SPL||Starpharma Holdings||Noteworthy for its good pipeline of innovations. Well run, widely followed.||226.24||-27.73||Health Care|
|CLH||Collection House||In similar space as Credit Corp. Strong stock performance has attracted a following and the stock appears to be well placed to run further||216.02||83.97||Industrials|
|SIV||Silver Chef||Strong jump in the share price of the equipment financing group has attracted a good following.||215.31||54.52||Industrials|
|MXI||MaxiTRANS Industries||Transport equipment maker posted good interim result. Has appealing yield and growth.||212.51||26.41||Industrials|
|WBB||Wide Bay Australia||The building society is trying to turn its fortunes around. Also worth watching for its exposure to Queensland housing market, particularly around major resource projects.||212.36||-2.65||Financials|
|RCG||RCG Corp||The footwear retailer is one of the best performing consumer stocks as online competition is not a big threat. Company has a good yield as well.||195.42||89.77||Consumer Discretionary|
|PFL||Patties Foods||Illiquid stock but has suite of well recognised consumer brands. Defensive yield.||194.80||-3.24||Consumer Staples|
|NEA||Nearmap||A stellar performer with an Interesting business that offers high quality aerial maps to companies & government.||191.64||1343.75||Information Technology|
|HSN||Hansen Technologies||Operates in a high potential/growth industry but is not covered by press or brokers.||189.48||46.01||Information Technology|
|ACL||Alchemia||One of the few biotechs with revenue stream. Good pipeline of oncology treatments.||183.29||-0.88||Health Care|
|DWS||DWS||Will be a big beneficiary if governments start spending on IT again.||180.68||1.09||Information Technology|
|IFM||Infomedia||Interesting tech play in the car parts market. Strong share price gain but gets little air play.||179.92||64.36||Information Technology|
|SFH||Specialty Fashion Group||In early stages of turnaround. Can the women's apparel retailer sustain the momentum?||173.97||47.16||Consumer Discretionary|
|ESV||Eservglobal||Mobile money transfer company that has been gaining traction. Widely held by instos but low press coverage||166.86||81.08||Information Technology|
|CKF||Collins Foods||One of the few food franchise listed companies.||165.54||47.4||Consumer Discretionary|
|DTL||Data#3||Well respected IT company that receives little press coverage.||153.97||-8.01||Information Technology|
|MLB||Melbourne IT||A perennial underperformer could be interesting turnaround story as management is in midst of restructuring the business.||150.81||28.51||Information Technology|
|MCP||McPherson's||The personal care and household products supplier had been relatively insulated from volatile discretionary spend and online threat, but its latest profit warning shows it's not immune.||143.11||-5.2||Consumer Discretionary|
|BGL||BigAir Group||The wireless small cap has gained strong following over past year or two but is often overlooked by investors and the press.||134.20||40.43||Telecommunication Services|
|GHC||Generation Healthcare REIT||One of the more interesting REITs. Income is more defensive than typical property stock and its greenfield expansion gives it earnings growth potential.||133.06||33.31||Financials|
|AZZ||Antares Energy||Liquid with good insto support. Already in production with exploration upside in Texas.||128.77||-3.81||Energy|
|WDS||WDS||Widely held with strong insto support. Engineering contractor diversified across mining, energy and infrastructure.||124.48||79.87||Industrials|
|AMA||AMA Group||Good turnaround story but under the automotive services group is radar of most.||120.33||0.39||Consumer Discretionary|
|POH||Phosphagenics||Sizable biotech with a game changing FY14 year ahead. Good insto following but questions of poor audit and governance standard could dog company.||117.35||-20.69||Health Care|
|IMD||Imdex||Drilling company is well supported by instos and should benefit from any rebound in exploration activity.||113.66||-53.62||Materials|
|SAR||Saracen Mineral Holdings||Emerging gold producer that is widely held by instos. Hitting milestones and looks cheap. Key asset is close to gold majors, which makes it a potential takeover target.||111.61||-56.4||Materials|
|MNW||Mint Wireless||Huge market potential if the mobile card payment solutions provider can gain market traction. Management aiming for $1 billion in transaction value a year.||111.06||1427.78||Information Technology|
|JIN||Jumbo Interactive||Innovative small cap facing off industry dominated by giants. Worth watching to see if it can carve out a profitable global business.||107.19||13.34||Consumer Discretionary|
|LCM||LogiCamms||Strong price performance and reasonable valuation attracting interest.||101.96||48.82||Industrials|
|REX||Regional Express Holdings||Well run airline that is overshadowed by Virgin and Qantas.||100.24||-14.55||Industrials|
|RUL||RungePincockMinarco||IT company to resource industry. Facing tough operating climate with new CEO trying to restructure and turnaround company.||96.83||48.91||Industrials|
|UBI||Universal Biosensors Inc||Well regarded biotech and one of few that's successfully manufacturing in Australia. Struck deal with a few global medical companies.||87.32||-43.82||Health Care|
|CLV||Clover Corp||One of the star performers in 2012. Operates in growing but relatively stable niche.||85.89||16.14||Health Care|
|LGD||Legend Corp||Electronic parts supplier to utilities and other industries. Stable earnings with good yield. Often overlooked.||83.41||35.59||Information Technology|
|DRM||Doray Minerals||Widely held by instos. One of the more favoured gold explorers by brokers.||82.99||-26.42||Materials|
|EML||Emerchants||Trying to change way corporates and governments disburse cash with its trackable and controllable debit card offering. If company can get $1 billion in loaded value on cards, the stock will surge.||81.03||225||Financials|
|CAA||Capral||An aluminium manufacturer that is actually holding up relatively well given that manufacturing is on the nose.||80.45||0||Materials|
|AOH||Altona Mining||Noteworthy copper play with Xstrata pull-out of Roseby project in Australia and the good ramp up of its Finnish project.||77.17||-42||Materials|
|TAN||Tandou||The only direct equity exposure to cotton prices. Also trades water rights and receives little press.||68.72||19.56||Consumer Staples|
|CKL||Colorpak||The small cap packaging company has grown via acquisitions over past few years.||67.68||49.95||Materials|
|PEN||Peninsula Energy||Widely held by instos and large free float. It's the only uranium miner on the list.||66.94||-38.89||Energy|
|BOL||Boom Logistics||Crane hire group is riding out the downturn in construction. It's widely held by instos and is very liquid.||65.29||-50.89||Industrials|
|YTC||YTC Resources||Next 12-mths will be eventful after YTC secured funding for its projects from Glencore.||57.60||-34.85||Materials|
|FGE||Forge Group||Good track record has been marred by a recent shock downgrade and capital raising. How long will it take to redeem itself?||57.30||-79.19||Industrials|
|KOV||Korvest||The construction products and services supplier has been hit by project delays and deferrals. But its relatively high yield could give it some support.||55.09||-0.47||Industrials|
|OTH||Onthehouse Holdings||Alternative small cap to online property leader REA Group. It is trying to use more timely housing data as a competitive edge against REA.||51.77||-7.35||Consumer Discretionary|
|CUV||Clinuvel Pharmaceuticals||Interesting skin disorder treatment developer that has done reasonably well over past year||50.83||-26.11||Health Care|
|TSM||ThinkSmart||Potential turnaround story worth keeping eye on.||47.88||59.46||Financials|
|EBT||eBet||Potential alternative to star performer Ainsworth Tech. Has exclusive deal with US poker machine maker WMS.||42.91||191.46||Consumer Discretionary|
|NTC||NetComm Wireless||Under appreciated small IT hardware maker that is punching above its weight. Hardly covered by press.||39.90||129.63||Information Technology|
|GXY||Galaxy Resources||Good upside potential if it can get its problem-prone Jiangsu plant back on track. Won't be easy to right this ship.||39.80||-86.06||Materials|
|UML||Unity Mining||Growing Tassie gold producer with high free float. Valuation looks compelling too.||33.70||-63.08||Materials|
|PGC||Paragon Care||Emerging hospital equipment supplier that has been ignored by market.||22.34||110.69||Health Care|
|Source: Eureka Report, Bloomberg|