In May, I wrote an article titled, "Who else wants 5 bargain small-cap stocks?"
I should have taken my own advice…
The five small companies I identified were:
- Yowie Group Ltd (ASX: YOW) – up 39%
- Senetas Corporation Limited (ASX: SEN) – up 26%
- Somnomed Limited (ASX: SOM) – up 10%
- AMA Group Ltd (ASX: AMA) – up 9%
- Bellamy's Australia Ltd (ASX: BAL) – up 24%
I already owned Bellamy's shares, so I'm happy they've jumped higher.
However, following the article, I placed buy orders for both Senetas and Yowie shares and – as usual – the shares rallied above my buy price. In fact, even after a week of my order being active in the market, I still hadn't been able to have either of my orders filled.
I decided to bite the bullet and up my price. Now I own shares of Senetas, Yowie and Bellamy's.
Luckily, each of these businesses are still small enough to have fantastic growth prospects and compelling valuations despite their rally.
Senetas, a developer of high-speed encryption devices, is intensely difficult to value – its lumpy contracts are nearly impossible to forecast. However, its market is growing and its product is first class.
SomnoMed produces a low-cost and less intrusive alternative of sleep apnoea devices to that of ResMed Inc. (CHESS) (ASX: RMD). One look at the huge – and largely untapped – market for sleep apnoea should tell you the opportunities for SomnoMed's SomnoDent product are significant.
AMA Group is a diversified automotive business pushing into panel beating. Despite its distasteful capital raising, AMA Group's margins are likely to improve as it continues to grow both organically and acquisitively throughout the country.
Bellamy's is the baby formula maker. Its product continues to fly off shelves across Australia. In fact, Bellamy's product is so highly in demand that anecdotal evidence suggests consumers can buy in bulk from Australian retail outlets to sell abroad for a big markup. A push into Asia gives Bellamy's a huge runway for growth.
Finally, until recently I held reservations about Yowie Group's growth strategy in the giant U.S consumer market. However, the confectionary company's recent announcement of an extended relationship with Walmart gives me much more confidence in its strategy. Whilst intensely speculative, those looking for a 'hope and pray' type investment could do worse than take a second look at Yowie.
2 more AWESOME small-cap stocks – FREE!
