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This small cap is flying despite the market crash. Here’s what I’d do now

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A small-cap growth share I like the look of is Clipper Logistics (LSE:CLG). In the past few months CLG has recovered to pre-market crash levels and surpassed these too.

Clipper Logistics is a logistics company with a focus on the retail sector. The changing face of retail means that retail companies face challenges such as new technology and rising mobile adoption. In addition, there is a rise in the service and sophistication expectations of consumers.

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Logistics is not a new business. As with most businesses, adopting technology to evolve processes is vital in the current day and age. CLG aims to resolve some of these issues for its customers head on with technology-led logistics solutions.

Small-cap opportunity

When the Covid-19 pandemic hit, markets worldwide were affected. Many industries, including retail, were hit hard by store closures and government lockdowns.

CLG lost over 50% of its share price value when the market crashed. The small-cap was trading at just over 280p per share in mid-February. At its lowest point approximately a month later, shares could be picked up at just 135p per share. Favourable full-year results mean CLG is now flying high at close to 440p per share. I feel this is a good growth share opportunity.

FY results

The end of August saw CLG release FY results for the year ending 30 April 2020, which were extremely positive. Group revenue increased by 8.8% from £460.2m to £500.7m. Profit after tax rose 20% from £13.4m to £16.2m. Cash generated from operations also rose from £28.3m up to £31.9m.

All of these positive aspects of the results led the CLG board to recommend a final dividend of 6.2p per share, making a total dividend per share of 9.7p for the full year. Many other small caps are struggling and have suspended dividends to conserve cash. The fact CLG is pressing ahead with a dividend is a good sign of a business performing well against the backdrop of economic uncertainty.

Among the financial results in the report, CLG also reported new lucrative contracts it had won too. These included a PPE supply contract for the NHS, a deal with online retailer Very Group, one with and fashion retailer Joules. In addition to new contracts, it expanded deals with online fashion retailer PrettyLittleThing.com (part of the burgeoning Boohoo Group), Sports Direct, and Levi Strauss amongst others.

My verdict

I have to admit that Clipper is not the cheapest as it trades approximately 21 times its FY21 earnings forecast. However, recent performance, the pent up demand of retail services post-lockdown, and the contracts it currently holds are all signs of a thriving business. These contracts include great new wins too. A dividend payout is also a nice bonus.

I expect that CLG’s share price will continue to rise. It has shown it possesses the infrastructure and appetite to continue growing domestically and internationally. If you are looking for a small cap, I would recommend Clipper. It is one to buy and hold as a great growth share opportunity, in my opinion.

A Top Share with Enormous Growth Potential

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Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Jabran Khan has no position in any shares mentioned. 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.