Are These 3 Small-Caps Set To Soar? EKF Diagnostics Holding PLC, Hardy Oil & Gas plc And Hydrodec Group plc

Should you pile into these 3 smaller companies right now? EKF Diagnostics Holding PLC (LON: EKF), Hardy Oil & Gas plc (LON: HDY) and Hydrodec Group plc (LON: HYR)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Shares in medical diagnostics business EKF Diagnostics (LSE: EKF) have soared by around 16% today despite there being no significant news flow released by the company. Its latest piece of news was a trading update released on 3 February and since then its shares have risen by a whopping 40%.

Encouragingly, the trading update showed that EKF is on-track to deliver cost savings of £6.7m from 2016 onwards and that it is putting in place the foundations for future growth. To aid this, EKF has adopted a singular focus on point-of-care and it remains focused on returning to core profitability and positive cash flow. Although EKF is expected to record a loss in the 2015 financial year, this is partly due to the expected impact of asset write downs of up to £60m.

While this is disappointing, EKF is anticipating core revenues of over £30m in 2016 and expects to have an EBITDA (earnings before interest, tax, depreciation and amortisation) of between £3m and £4m this year. As such, and while it remains a relatively high risk play, which is in the midst of a major turnaround, EKF may be of interest to less risk averse investors.

Also rising today are shares in Hydrodec (LSE: HDY), with the cleantech industrial oil re-refining company posting gains of 15% even though there’s no significant news . Despite this rise, Hydrodec is still down by 59% in the last year, a key reason for this being the falling oil price during the period. As a result of this, Hydrodec last week confirmed the disposal of its UK collections business and UK lubricant oil re-refining, with it retaining an economic interest in the latter through a potential profit share.

The deal seems to be a sound one for Hydrodec since it reduces the downside risk to the business by its UK operations given the relatively low oil price. It also allows the company to shift its focus towards its transformer oil technology business, where it could have a competitive advantage due to its proven technology. Although the company’s shares have performed well today, there is still some way to go as it proceeds with what is an ambitious turnaround plan. However, it may be worth a closer look for less risk averse investors.

Meanwhile, Hardy Oil & Gas (LSE: HDY) has also performed well today, with its shares being up 11%. As with Hydrodec, Hardy has been hurt by a falling oil price in the last year, with its shares being down by 49% during the period.

Looking ahead, Hardy could deliver improved share price performance since it continues to have no debt on its balance sheet and a cash position of $19.3m. However, as its recent results highlighted, the company may have the potential to develop its India-based assets, but the pace of activity has been rather slower than it had hoped. And with there being a number of oil and gas plays trading on low valuations and having bright futures, it may be prudent to look elsewhere rather than buying a slice of Hardy at the present time.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens has no position in any shares mentioned. 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.

More on Investing Articles

Close-up of British bank notes
Investing Articles

Here’s how I’d invest a £20K Stocks & Shares ISA to target £1,600 in dividend income every year

Our writer gets into the nitty gritty of how he would aim to build sizeable passive income streams from a…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

2 reasons why I’m loading up on FTSE 100 shares

This Fool thinks FTSE 100 shares look cheap. With that, he plans to continue snapping them up today. Here's one…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Why wait? I’d buy FTSE 100 shares now before the next stock market rally!

Our writer explains why he'd snap up what he sees as bargain FTSE 100 shares now rather than waiting in…

Read more »

Investing Articles

Is it time for me to change my tune about Rolls-Royce shares?

This Fool has steered clear of buying Rolls-Royce shares. But after its recent performance, he's reconsidering his stance. Here's why.

Read more »

Investing Articles

Aviva share price: 3 reasons to consider buying for 2024

The Aviva share price is still lower then when I bought some nearly a decade ago. Here's why I'm thinking…

Read more »

Front view photo of a woman using digital tablet in London
Investing Articles

These 2 shares could bank me £328 a month in second income

Jon Smith runs through two FTSE stocks that have above-average dividend yields that could pay out a generous second income…

Read more »

Stack of one pound coins falling over
Investing Articles

This passive income plan is simple – but could earn me thousands!

Christopher Ruane explains how putting a fiver a day to work in the stock market might help him earn thousands…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on

After record profits, are Lloyds shares a buy, sell, or hold?

As Lloyds pulls in pre-tax profits of £7.5bn, boosts its dividend, and continues to repurchase shares, are the company’s shares…

Read more »