The recent stock market crash has been unkind to scores and scores of UK-listed shares. The threat of a deep and extended global recession should be taken seriously, naturally. But the extent of some share selling has been quite OTT, in my opinion.
CareTech Holding (LSE: CTH) is a small-cap I think has been way, way oversold. At current prices of 385p per share, the care and education specialist deals on a forward price-to-earnings (P/E) ratio of just 9.5 times. It’s a rating that both undermines its exceptional defensive qualities and its rising revenues opportunities, in my opinion.
The company provides a wide range of essential social care services for children and adults. It thus provides an indispensable service that does not bend to changes in the broader economic landscape. Indeed, recent CareTech comments disclosing that business has remained “resilient” since the end of March underline just what a brilliant investing lifeboat it is during tough times like these.
Don’t think of CareTech as just a wise buy as the global economy shakes, though. The firm remains committed to acquisitions to bolster its longer-term profits outlook. Earlier this year entered it secured a 51% stake in AS Group, a business it describes as “the largest provider of private outpatient mental health services in the United Arab Emirates.” It has plenty of financial firepower to follow through on its packed pipeline of investment opportunities too.
Another crash casualty
Tyman is another small-cap I’d happily stash into my own stocks portfolio following the recent crash. At current prices around 165p per share, it trades on a rock-bottom forward P/E ratio of around 7.5 times. It’s a reading that I don’t think reflects its rock-solid balance sheet or its brilliant long-term profits picture.
The business makes the components for doors and windows that are essential for homebuilding. It stands to struggle in the near term due to the cyclical nature of its operations. But the strength of its market-leading brands all over the globe — it has operations across Europe, The Americas and Asia — should put it in the box seat for a strong recovery when the global economic downturn eases.
A glorious foodie
I’d also be happy to buy sausage skin maker Devro today. This small-cap’s price of 160p per share means that it trades on an earnings multiple of approximately 10 times, based on current forecasts. And it’s a company that’s expected to keep growing earnings over the next couple of years, irrespective of the upcoming macroeconomic slump.
We can’t do without food, obviously. And so those involved in the production of edible goods tend to be more resilient in times like these. But don’t just think that Devro as a top buy for the next few years. The recent investments it has made to boost its product ranges and its global manufacturing base should bolster its profit-making abilities over the longer term too.
Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…
You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.
And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.
Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.
But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Devro. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.