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Three small cap stocks that surprised the markets this month

by , 06 July 2022
Three small cap stocks that surprised the markets this month
Inflation is high, prices of everything, except for stocks, are rising.
It's been a tough time investing in 2022 so far.

But still there are great opportunities on the JSE.

In fact, some small cap shares are doing exceedingly well…

Let me explain.
In case you missed it:  Pickpocket’s Trader X closed out a USDZAR trade for a 155% gain on 27 June and just yesterday he moved his stoploss on EURUSD trade to lock in fantastic gains of 245.98%  For more forex profits like these, go here.

Three small companies with BIG profits

Small Cap #1 – Argent Industrial

Argent is a small industrial company with operations in South Africa, United Kingdom and the United States of America.

It sells security gates, castors and ladders, fuel storage solutions and other steel and iron products.

The company just announced an amazing set of results:

Revenue is up from R1.96 billion to R2.43 billion in 2022.

Profit from the year soared from R132 million to R192 million.

On a per share basis the company reported headline earnings per share of 339cps – compared to a R14 share price.

That means it is on a PE ratio of only 4.27.

The company’s net asset value per share has now increased to a whopping R22.38 – meaning even at the current share price it is on a discount of 35% to its underlying value.

The company also declared its first dividend since 2018.

It will pay shareholders 42cps, and I am certain it will do some more share buybacks in 2022/2023.

Small Cap Stock #2 – Salungano

Salungano is a coal miner, which was previously called Wescoal. It then did a merger with Keaton Energy.

The company announced a 32% increase in revenue this week, with mining production hitting 8.2 million tonnes for the year.

The company saw gross profit soar 34% from R 411 million to R551 million.

It generated a huge R672 million in cash from operations and saw headline earnings per share come in at 6.1cps compared to a 2.87c loss in the previous year.

The current high coal price will help the company in its 2022/2023 year, as it has just made its first coal exports through the Durban harbour.

The company’s new Moabsvelden mine is reaching steady state production and has a long-term coal supply agreement with Eskom. Cash generation is much stronger than the earnings per share suggests, and I suspect that in the coming year the company will return to paying dividends.

Looking for more great small cap stocks offering big profits go here?

Small Cap Stock #3 – Sephaku Holdings

Sephaku is a holdings company. It’s main operating businesses are Sephaku
Cement and Metier which sells ready mix concrete.

Sephaku recently released results for the year ended March 2022 and it had a great year.

Group consolidated revenue climbed from R634 million to R786 million.

Net profit after tax more than doubled from R20 million to R45 million.

Headline earnings per share came in at 17.67cps – compared to only 6.09cps in the previous year.

2022 will be a tougher year. The company won’t see profits climb another 100% or more this year, but it will make some gains, especially if imports are curbed, and local projects start taking off.

The company’s plan is to reduce SepCem’s debt by a further 35% this year. It will increase profitability by doing so and improve the company’s longer-term sustainability.

These are just three of the small cap stocks that have recently reported results – and surprised markets. You see, these small companies are often overlooked and forgotten. But they tend to be very resilient – as these companies have proven. They have made BIG profits in a very tough time…

Check out my Red Hot Penny Shares newsletter, as I share my research into the best penny stocks and small cap companies to invest in on the JSE.

Three small cap stocks that surprised the markets this month
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