A top e-commerce share

Online shopping is predicted to carry on growing strongly in the post-pandemic era. So I’m continuing to pay Attraqt Group (LSE: ATQT) close attention. This UK tech stock allows internet retailers to create a personalised experience for their cyber shoppers.

Giving the best customer service is becoming ever-more critical as competition online grows. So I expect demand for this penny stock’s services to grow strongly over the next decade. Indeed, the penny stock chalked up 35 more multi-year contract renewals in 2021. This was on top of the 38 it sealed the year before.

I am concerned about the impact of runaway inflation on online retailers and by extension orders at Attraqt Group. Also, while Attraqt is expected to finally move into profit in 2022, the business trades on a high forward price-to-earnings (P/E) ratio of 105 times. Such a high multiple could cause a sharp share price reversal if trading shows signs of cooling down.

Playing the gold boom with penny stocks

I’d also stock up on Serabi Gold (LSE: SRB) shares as the outlook for gold improves. Sinking bullion prices around the turn of the year meant that this mining stock is 21% cheaper than it was at this time last year. As a long-term investor, I think this represents an attractive buying opportunity.

Firstly, let’s look at the gold price picture. The precious metal recently hit its most expensive since September 2020, above $1,970 per ounce as the tragic conflict in Ukraine escalated. Further sizeable gains for the safe-haven metal can’t be ruled out as the war continues, either. Indeed, analysts at Goldman Sachs now think the yellow metal will reach new record highs of $2,150 in the coming months.

It’s not just the worrying geopolitical landscape that’s forcing investors to run for cover with gold. Western sanctions placed upon Russia have raised fears over inflation rising still higher as energy prices have jumped. In fact co-ordinated financial action over the weekend has increased the chances of a ‘stagflationary’ storm, i.e., one of fast-rising prices and weak economic growth. This is the perfect scenario for gold prices to thrive in.

As I say, though, I’m a long-term share buyer. So I’d buy Serabi not solely on the gold price outlook for the next year or so. Mining for metal is a highly complex business that’s fraught with danger to a company’s profits. Output issues can hit revenues hard and drive costs through the roof. But I’m excited by the progress Serabi is making on the operational front. Total output rose 7% year-on-year in 2021. And development of its high-quality Coringa asset is coming along nicely too.

City analysts think earnings at the company will rise 4% in 2022. This leaves the penny stock trading on a forward P/E ratio of just 4.9 times. I think this could make it too cheap for me to miss.

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Bushveld pulls vanadium — a key component in devices that store energy — out of the ground. It also helps develop projects that use vanadium redox flow batteries. Consequently I expect revenues at Bushveld as investment in renewable energy accelerates.

The intermittent nature of natural energy sources means battery energy storage is essential to compensate for when the wind fails to blow and the sun fails to shine. It’s why analysts at Frost & Sullivan think the battery energy storage market will be worth $15.9bn by 2030, up from $2bn last year.

Buying Bushveld shares exposes investors to the volatile mining industry where costs can unexpectedly balloon and production levels can disappoint, delivering a big hit to profits. Still, I think the potential rewards on offer at this penny stock far outweigh the risks for me.

A penny stock for the e-commerce boom

The ongoing e-commerce explosion creates plenty of opportunity for me to make a buck too. I already have exposure to companies which benefit from the rise of online shopping, from packaging manufacturers and logistics businesses to retailers themselves.

And I’m thinking of loading up on Attraqt (LSE: ATQT) as well. This penny stock lets e-tailers provide a personalised shopping experience for their customers using AI algorithms.

This helps retailers to get an advantage in what is an increasingly congested marketplace. The business is trading extremely strongly right now, and it won contracts with £1m worth of annual recurring revenues in the third quarter alone. I think Attraqt is a top buy for me, despite the threat that revenues could sink amid a broader slowdown in consumer spending.

A fashion favourite

The online shopping boom is also causing me to consider buying N Brown Group (LSE: BWNG). In recent years, the retailer has wound down its mail order and bricks-and-mortar operations to concentrate solely on e-commerce.

Its transition to a digital-only model has gone down well with consumers. And the business is accelerating its plans to capitalise on the cyber shopping phenomenon. This includes developing new websites aimed to improve the customer experience.

I also like N Brown because of its focus on making clothing for plus-size and elderly customers. These are fast-growing segments and N Brown has some highly-popular brands to call upon to exploit this to its fullest. These include Jacamo, Simply Be and JD Williams.

More recently, I’ve also been encouraged by the pace at which sales at N Brown’s Home Essentials homewares brand has grown since its launch last year.

However, profits at the penny stock are likely to take a hit as supply chain problems push up costs. But I think it should still have the mettle to deliver me splendid long-term earnings growth.

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This particular UK share allows e-tailers to provide personal shopping experiences to their customers using AI algorithms. And it’s doing a roaring trade as the virtual marketplace becomes more competitive and companies try to get an edge. Attraqt’s annual recurring revenue bookings ballooned 40% year-on-year in the six months to June.

Analysts at eMarketer think e-commerce market will continue soaring. They think it will account for 21.8% of all global retail sales in 2024, up from a predicted 19.5% this year. The sales opportunities for shares like Attraqt therefore look pretty compelling, at least in my view. Though I’m aware that this software share is loss-making. And any delays to moving into the black, whether through rising costs or disappointing revenues, could have a significant impact on the Attraqt share price.

Medical marvel

The cannabis market is another that’s tipped for big growth, over the next decade at least. Boffins at Fortune Business Insight think the market will be worth $97.4bn in five years. It should grow at a compound annual growth rate of 32.9% between 2018 and 2026. Kanabo Group (LSE: KNB), which makes cannabidiol-based products, could be well placed to exploit this boom.

As well as selling products such as oils, the business is betting big that its medical-grade VapePod vaporiser will make it big profits in the years ahead. The penny stock shipped its first batch of cartridges for the technology into the UK earlier this month. Lawmakers are becoming increasingly receptive to the use of cannabis to treat physical and psychological disorders. But the issue remains controversial and any U-turn by legislators would have a devastating effect on Kanabo’s operations.

A penny stock on a roll

Consumers are demanding more and more bang for their buck. The rise of discount supermarkets Aldi and Lidl over the past decade is the most obvious illustration of the booming demand for value. It’s a theme that is playing into the hands of facial tissue, and toilet and kitchen rolls, manufacturer Accrol Group Holdings (LSE: ACRL).

This stock manufactures private label products that are sold by almost every major British supermarket. And it is grabbing market share at an impressive rate. Accrol grew its share of the market to 15.9% in the last fiscal year (to April 2021) from 12% two years earlier.

I’m tipping Accrol’s sales to continue chugging steadily higher. However, it’s important for me to remember that rising raw material costs could have significant consequences for the company’s bottom line.

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Where I’m bullish

Ecommerce has changed the way we live, where we can easily buy what we want when we want. Companies like Amazon, Shopify and eBay have all been needed by the public during these confusing times. And this has shown where share value in all companies has seen great growth over 2020. New coronavirus measures mean that we need Ecommerce more now than ever with social distancing in place.

Research shows that the Ecommerce market can grow to $6.542 trillion by 2023. This makes sense as 1.92 billion people purchased goods online in 2019 alone. The more restrictive the coronavirus measures become, the more we need Ecommerce.

Artificial intelligence is another industry that has strong prospects for growth. This is because we use it more every day. The most used social media platforms all have artificial intelligence implemented in their models. Companies such as Instagram and Facebook use AI models to give the user content suited to what they want to see. This is another industry I am confident will see amazing growth over the coming years. With a market value of $39.9 billion in 2019 and growing rapidly, artificial intelligence is something that is going to be used more and more by us.

A stock to take advantage of growing markets

Attraqt (LSE: ATQT) is a company based in the UK using AI algorithms for online retail firms in ecommerce. It creates Ecommerce solutions for businesses looking to get ahead in the competitive growing market. Its platform is used by businesses to create a customer friendly experience for their users. AI  used in its platform creates a personalised experience for shoppers, meaning customers see the things they want. By taking advantage of the rapidly growing AI and Ecommerce markets, Attraqt is definitely a stock to watch in the future.

Where is the growth potential?

Attraqt has a professional team of developers, merchandisers and data scientists creating the platform. Taking a look at its finances, revenue has increased by 13.3% and gross profit by 22.1% from 2018 to 2019. In addition to this, total assets increased by 65.5% in the same year, showing a strong performance for such a new publicly listed company.

Attraqt currently has partnerships with companies such as IBM and Shopify, and does business with known brands such as Boohoo, Asos and more than 300 others. With virus measures getting stricter online, retail seems to be only growing, showing how Attraqt’s solutions can be adopted by many more companies in the future as retail is moved more online. 

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The business — which provides visual merchandising and search services to online retailers — was more than 20% lower from the prior night’s close and, although off intra-day lows, remains 18% lower on the day.

Attraqt announced that the review launched following the appointment of Eric Dodd as finance director in September had caused it to cut down some of its sales forecasts.  

The AIM-quoted business advised that “due to inaccuracies in forecasting the timing of certain contracts and client ‘go-live’ dates,” revenues are expected to be around 10% lower for 2017 than it had  expected. It also warned that the lower revenue run rate endured at the end of 2017 will carry forward into next year.

On a brighter note, Attraqt did advise that it expected to report high-single-digit organic growth in 2017, and that it should be EBITDA-positive in the second half of the year and broadly break-even for the year as a whole.

Forecasts fall

Attraqt said that the delays to pipeline conversion were the result result of “a number of significant new contracts closing, but later than planned, and some other contract decisions being delayed,” although it advised that its sales pipeline “remains strong” and that it boasts an order book of £2m.

It added that it was confident the forecasting inaccuracies around the timing of contract wins has now been resolved, and that management is working on a plan to resolve delayed ‘go-live’ dates.

City brokers had been expecting it to finally bounce into the black after years of losses with earnings of 1p per share, but today’s announcement could put these hopes through the shredder.

And as a consequence, the tech titan’s high forward P/E ratio of 36 times is likely to bump even higher in the days ahead. I reckon Attraqt, despite the brilliant revenues opportunities created by an expanding online retail sector, remains a pretty-risky dip buy at current prices.

Retailer on the ropes

Topps Tiles (LSE: TPT) has also endured no shortage of turnover trouble in recent times and, with economic headwinds intensifying in the UK, I also reckon the risks outweigh potential rewards here too.

The Cheadle-based firm continues to slump in value, its share price collapsing 34% in less than six months, and the steady stream of disappointing trading releases suggests that further woe can be expected.

Topps announced just this month that like-for-like revenues dipped 2.9% during the 12 months to September as a result of a “challenging” trading environment and it suggested that further troubles could be around the corner, noting that it is taking a “prudent view on market conditions for the year ahead.”

The City is expecting earnings to fall 5% in fiscal 2019, carrying on from the predicted 15% slide last year. While this results in a very-cheap forward P/E rating of 9.9 times, the strong possibility of swingeing downgrades to earnings forecasts here too is encouraging me to stay well away.

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The market clearly warmed to the mega £12.5bn cash-and-shares acquisition (making BT the UK’s leading converged communications provider) in the expectation of enhanced future returns for shareholders. However, after a spate of costly problems in other areas of the group — including fraud in its Italian business and historical failings in its Openreach business — investor sentiment is now at a low ebb, with the shares trading at multi-year lows of under 300p.

Contrarian opportunity

Despite recent problems, management changes and an ongoing underfunded pension scheme, the fundamental investment case for BT isn’t radically different to when the shares were 500p. A current-year forecast P/E of 10.5 looks good value to my eye, with earnings growth forecast to resume the following year.

Likewise, a trailing dividend yield of 5.3% has considerable appeal, because the board has signalled its confidence in the future by retaining a progressive dividend policy, albeit with a current-year increase to be lower than the 10% previously targeted.

BT now looks to me like a classic contrarian opportunity and is a stock I would be happy to buy today on that basis.

A little-known growth stock

If the FTSE 100 telecoms giant gets back on track, it should deliver strong gains for investors from today’s sub-300p price. It may take a successful small growth stock to outperform it. Could Attraqt (LSE: ATQT) be such a stock?

This online visual merchandising company is probably unknown to most investors, despite having a client base of over 230 familiar retail names. At a share price of 48.5p — unchanged after the release of its half-year results today — AIM-listed Attraqt is valued at £52m.

Attraqtive

Having completed a major acquisition of complementary business Fredhopper in March, Attraqt today reported a 227% rise in revenue to £5.5m for the six months ended 30 June. It said the H1 annualised exit rate was £16.5m and that it has continued to see “significant sales momentum” since the period end.

Valued at just over three times running sales and comfortably below three times likely forward 12-month sales, the stock looks attractively priced for a company with promise of strong top-line growth. This promise is supported by 41 upgrades and over 100 client renewals during H1, a growing number of new names signed during and since the period end and rising new contract values.

Today’s results show a £3.2m pre-tax loss in H1, although £2.1m was down to exceptional costs related to the Fredhopper acquisition. Ahead of today, the one broker covering the stock (presumably the house broker) was forecasting underlying earnings per share of 1p for the full year, rising to 2p next year. The latter gives an earnings multiple of 24.25 at the current share price, which again looks attractive for the growth potential.

As such, I rate Attraqt a risky ‘buy’ — risky not only because it’s a small-cap, but also because the e-commerce software market is a rapidly evolving one.

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