Should You Buy These Two Small Caps: BowLeven PLC And Wincanton plc?


This could prove to be an interesting period for investors in BowLeven (LSE: BLVN), with the West Africa focused oil and gas company set to commence drilling onshore Cameroon for the first time later this month. Previously, of course, it has focused its efforts offshore and, with the transfer of assets as part of its farm-out deal at the Etinde oil and gas permit in Cameroon progressing in line with expectations, investor sentiment could pick up in the short to medium term.

Clearly, BowLeven’s share price is highly correlated to the wider oil price and, as a result, it has been weak in recent months and has fallen by 16% in the last year. However, with the possibility of more positive news flow, as well as a balance sheet that contains around $20m in cash and no debt, BowLeven could prove to be a relatively strong performer moving forward.

Certainly, it remains a high-risk resources play that is likely to deliver high volatility but, looking ahead, it could see sentiment pick up and push its share price higher.


Supply chains solutions provider Wincanton (LSE: WIN) has been a strong performer during the last year, with its share price rising by 21%. While impressive, there could be even better performance to come, since Wincanton continues to offer a potent mix of growth and value.

For example, it is expected to increase its bottom line by 7% next year, followed by 12% the year after. That’s a very respectable rate of growth and shows that, after a period of disappointment, Wincanton looks set to deliver a number of years of upbeat earnings numbers.

Despite this, it continues to trade at a very appealing price level, with Wincanton currently having a price to earnings (P/E) ratio of just 9.9. This highlights that there is considerable upward rerating potential available and, when combined with its above average earnings forecasts, equates to a price to earnings growth (PEG) ratio of just 0.7. This indicates that Wincanton offer growth at a reasonable price and, as a result, could make share price gains moving forward.

In addition, Wincanton is also expected to pay a dividend in financial year 2017 for the first time since 2011. Although it only yields 1.4%, the forecast payment of a dividend shows that Wincanton is becoming financially stronger, which should provide investors in the company with more confidence regarding its long term future. As such, it could be worth buying at the present time.

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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.