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3 Small-Cap Superstars? Monitise Plc, AFC Energy plc And Staffline Group Plc

One of the most difficult aspects of being an investor is timing. For example, it’s possible to conduct thorough research and find a company with an excellent track record, great management team and sound strategy. But if you buy it at the wrong time losses can soon follow.

The wrong time

That’s been the story for investors in mobile payments solutions company Monitise (LSE: MONI). Its shares have collapsed in recent years and are now down over 90% in the last year alone. That’s despite the company having an excellent and in-demand product, a management team with a good track record and a prudent strategy of seeking out major blue-chip clients.

The problem, though, is that Monitise lost a key backer, Visa, and since then it has struggled to prove to the market that it can eventually become a profitable business. For example, in its most recent update its financial performance appeared to go backwards rather than move closer towards a black bottom line.

If profitability is achieved, of course, then it is very likely that Monitise’s share price will soar. However, while this is a possibility in the medium to long term, in the meantime there is a danger that the company’s share price will come under further pressure. As such, the timing still does not seem to be right to buy Monitise.

Worth buying now?

However, the opposite is true for low-cost alkaline fuel cell technology company, AFC Energy (LSE: AFC). It continues to make excellent progress with its strategy and has signed multiple agreements to provide its services across the globe over the medium to long term. Furthermore, AFC moved into profitability in the first half of the current year which shows that it is a viable business which could deliver rising profitability as the use of cleaner and more efficient fuels becomes more widespread.

Despite this, AFC’s share price has fallen by 24% in the last month and a reason for this could be profit-taking by investors. After all, the company’s share price is still up 244% since the turn of the year and, while similar gains may not be as easy to come by in the coming months, AFC remains a financially sound, well-managed and profitable business to buy now for the long term.

Growth play pedigree

Buying a slice of recruitment company Staffline (LSE: STAF), meanwhile, may be viewed as arriving too late at the party by many investors. That’s because, with the UK economy going from strength to strength, Staffline’s share price has already soared by 87% since the turn of the year.

However, there is plenty more scope for capital gains, since Staffline remains not only a top notch growth play, but a highly resilient business. Evidence of this can be seen in its performance during the last five years where it has posted a rise in earnings in every year. This shows that even if UK economic growth falters, Staffline could still outperform its peers and add a degree of stability to a portfolio.

And, with Staffline due to increase its earnings by 50% this year and by a further 20% next year, its pedigree as a growth play remains superb. Its price to earnings growth (PEG) ratio of 0.7, meanwhile, indicates that it offers good value for money, while dividend growth of 19% next year could make it a more alluring income play.

Of course, there are a number of other small-cap stocks that could be worth buying right now and, with that in mind, the analysts at The Motley Fool have written a free and without obligation guide called 1 Top Small-Cap Stock From The Motley Fool.

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Peter Stephens owns shares of AFC Energy. The Motley Fool UK owns shares of Monitise. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.