Writing in its July monthly update, the top performing Flinders Emerging Companies Fund said it is wary of strongly growing yet excessively priced small companies.
Nevertheless, it says there are still excellent and undervalued growth opportunities in the share market, feeling that many may be highlighted in this August reporting season.
One of the fund's top 5 active positions is mining services company Mineral Resources Limited (ASX:MIN).
A backdoor play on the lithium stock boom, it has just reported full year profits jumped 35 per cent higher, rewarding shareholders by increasing its full year fully franked dividend by 20 per cent to 65 cents per share.
With the Mineral Resources share price at around $15, MIN shares trade on an attractive fully franked dividend yield of 4.3 per cent, or 6.2 per cent when grossed up for franking credits.
One traditionally expensive company it does hold is Appen Ltd (ASX:APX).
The Appen share price fell almost 19 per cent in July as many US exposed tech stocks sold off with their Nasdaq listed counterparts. Flinders says it remains confident in the growth outlook for the company's services, which are currently experiencing structural tailwinds.
Two "clobbered" vet stocks set to rebound
The fund holds two veterinary related stocks in the portfolio, and both got clobbered in July.
The Apiam Animal Health Ltd (ASX:AHX) share price fell 20 per cent in July, with National Veterinary Care Limited (ASX:NVL) shares falling 21 per cent in the month.
Both companies issued soft profit guidance for the current financial year, citing lower activity in the past quarter.
The fund feels that both stocks will rebound with their excellent growth opportunities and solid underlying markets. While Apiam has much greater agricultural exposure, National Vet is exposed to growing urban pet expenditure.
In the past 12 months to July 31 2018, the Flinders Emerging Companies Fund has gained 31.7 per cent, outperforming the 22.6 per cent gain in its benchmark S&P/ASX Small Ordinaries Accumulation Index.
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