Today I’m looking at three promising small-caps held by successful fund manager Mark Slater, Alliance Pharma (LSE: APH), STV Group (LSE: STV) and Inspired Energy (LSE: INSE)

In case you don’t know, Mark Slater is Jim Slater’s son and he’s just as savvy as his father.  Jim Slater’s Zulu Principle method of stock picking is no doubt an influence. But Mark Slater has built up a robust investment record on his own account over several years, through his fund managing investment business Slater Investments Ltd.

A capital-light business model

Alliance Pharma aims to acquire, license and distribute pharmaceutical and healthcare products. The firm reckons it looks for underlying sales stability and growth potential before making an acquisition and has 30 such deals under its belt since 1998.

A big part of the company’s strategy is to outsource capital-intensive activities such as manufacturing, warehousing and logistics to what the firm describes as ‘class-leading’ specialists. Alliance Pharma then distributes its products through wholesalers, retail pharmacies, hospitals and an international network of distributors.

That strikes me as a potentially efficient business model, and Alliance Pharma has a record of profits over the last few years, although the rate of profit growth has been a bit lumpy.

At today’s share price of 49p, Alliance Pharma trades on a forward price-to-earnings (P/E) multiple of just under 14 for 2016 and has a forward dividend yield of 2.5%.

A growing media empire

STV Group describes itself as Scotland’s leading digital media brand. The firm reckons its programmes reach 3.6m viewers each month. They include shows such as EmmerdaleCoronation Street, The X Factor, Britain’s Got Talent and Antiques Road Trip, alongside what the company claims is the most comprehensive local news service in the UK. 

STV says its production arm has ambitious plans for domestic and international growth. Earnings have been climbing steadily over the last few years, and at today’s 505p share price the forward P/E rating runs at around 11.5 for 2016. Meanwhile, there’s a forward dividend yield on offer of 2.4 % or so, with the payout covered around 1.8 times by City analysts’ estimate of forward earnings.   

If STV can realise the potential of its expansion hopes, the present valuation seems reasonable.

Energising growth
Inspired Energy describes itself as one of the largest energy consultants in the UK. The firm provides a range of energy advisory services and intelligent energy solutions to the industrial and commercial sector. Operations include buying strategies, market intelligence, negotiation and contract management solutions, all developed according to client-specific needs, the firm says. That sees the company involved in energy procurement, market analysis, historical audits, energy management, bureau services and renewable energy projects.

Business has been brisk and the firm sports an impressive record of earnings’ growth over the last five years or so. Today, with the shares at 13.75p, Inspired Energy trades on a forward P/E ratio of just over 12 for 2016 and promises a 2.5% dividend yield. Forward earnings look set to cover the payout a healthy 3.2 times, suggesting the directors see plenty of potential for further expansion from here.

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Kevin Godbold owns shares in Inspired Energy. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.