While the general S&P/ASX 200 Index (ASX: XJO) has moved upwards confidently over March and April, just a couple of sectors are driving the recovery.
While finance and mining, dominated by large caps, have made hay over the past few weeks, it's still a volatile and uncertain time for small-cap ASX shares.
So it's worth being selective about smaller businesses before buying into them.
Cyan Investment Management portfolio manager Dean Fergie recently presented three ASX shares he's holding that are going gangbusters right now:
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Australians have higher expectations about deliveries now
Delivery services platform Zoom2u Technologies Ltd (ASX: Z2U) gained a tidy 24% over March, and Fergie expects more growth to come.
"The delivery marketplace is well overdue to be disrupted with the incumbent, Australia Post, not being able to offer competitive delivery times, nor services such as driver tracking (due to union rules)," he said in a memo to clients.
"Zoom2U is well established in this market with a proven commercial driver network and user deployed tracking software. And we expect the news-flow and positive financial results to continue for this exciting business."
Like most tech stocks, Zoom2u has suffered a correction in recent months, dipping more than 29% for the year so far.
For Fergie, the company can take advantage of a recent cultural shift in Australia.
"We believe there is a step-change in customer expectations of delivery times, with the likes of Amazon.com Inc (NASDAQ: AMZN) and the food delivery platforms offering next day, same day or one-hour delivery windows."
A massive contract with Jetstar
Quickstep Holdings Limited (ASX: QHL) is an unusual business that not many investors may have heard of.
But Fergie has held this ASX share for a long time and feels like its time has come after the share price rocketed up 17% last month.
"Quickstep manufacturers composite parts for the F35 fighter jet and C130 bomber, provides commercial aerospace maintenance services, and produces high-end composite products for drone manufacturers."
The Cyan team recently visited Quickstep's Melbourne facilities in person and was told of "significant tailwinds" in all three of its business units.
"Indeed, post the end of March, Quickstep has announced a milestone three-year $30 to $35 million maintenance contract with Jetstar," said Fergie.
"We view this as both financially and strategically significant as Quickstep has dislodged offshore incumbents to bring the maintenance work to Australia."
Cheers to this ASX small-cap
The Mighty Craft Ltd (ASX: MCL) share price remained flat during March, but Fergie feels like it made the "most significant" announcement out of all his holdings.
"On the 30th March, it upgraded its medium-term ambitions for beer production from 12 million to 25 million litres," he said.
"Mighty Craft is having some phenomenal success with its Better Beer brand which is expected to sell four million litres in FY22 despite only launching in November 2021."
As a brewing and distillation company, Mighty Craft is a natural beneficiary of the post-pandemic life as customers flood back into pubs and clubs.
But even considering that, Fergie reckons the business is outperforming.
"It is enjoying an outstanding recovery from the challenges of COVID," he said.
"We currently see a real disconnect between the current share price and true value of the Mighty Craft group of assets and brands, and expect [a] material re-rate when market conditions improve for emerging companies."
