Despite plenty of studies showing that the best way for individual investors to outperform the market is to focus on less efficient and less followed areas of the market such as the companies with smaller market capitalisations, many investors still prefer to try and beat the market by investing in blue-chip stocks.
The following three companies all fall squarely in the 'small-cap' space and have reported earnings which have seen the market re-rate each stock over 10% higher.
1) Silver Chef Limited (ASX: SIV) took a tumble late last year after informing the market of challenging conditions in its GoGetta business. Investors appeared pleased with what they saw today in the equipment financier's results and sent the shares over 13% higher.
2) Infomedia Limited (ASX: IFM) shares are over 15% higher today and have hit a new 52-week high after the software company reported a 19.4% increase in sales revenue and a 12.4% increase in profit. The board also declared a dividend of 1.89 cents per share, up 49% on the prior corresponding period. For the full year, management reaffirmed guidance for a net profit after tax of between $11 million and $12 million.
3) Calibre Group Limited (ASX: CGH) ended the day up around 10.6%, having been up as much as 19% earlier in the day. The mining services contractor has had a disappointing start to its relatively-short listed life (it listed in mid-2012), however the company produced a reasonable half-yearly result and declared a dividend which suggests the company is trading on a forward yield of over 10%.
Foolish takeaway
Arguably Calibre's shares were 'over-sold' after the market became wary of both firm-specific issues and the general downturn in the mining services sector. Given the hazy outlook for the sector, investors may be safer leaving this one alone for the time being although on some metrics it still looks cheap.
Infomedia continues to have strong momentum as it heads into the second half of the year and should continue to impress. Provided the company continues to grow earnings then its share price should, over time, follow too.
Silver Chef is expected to produce a stronger result in the second half than the first half. If investors determine that Silver Chef's problems are (or were) short term then the stock could continue to do well from here, however if the business is struggling to grow earnings due to increased competition then it may be unwise to jump aboard.
