Brakes for cars

Surface Transforms develops, manufactures, and markets brake parts and components for automobiles and other vehicles. It has worldwide operations spread throughout the UK, Europe, US, and other parts of the world too.

It is worth remembering that a penny stock is one that trades for less than £1. As I write, Surface shares are trading for 32p. At this time last year, they were trading for 47p, which is a 31% drop over a 12-month period.

To buy or not to buy?

My research suggests that ownership of automobiles in the world is at the highest levels ever. In fact, it is estimated that there are approximately 1.474bn vehicles on the road, according to an automotive research agency. Although I’m not a car fanatic or expert, I do know that brakes are an essential component and this is where a business like Surface Transforms could benefit and capitalise.

Next, the world of brakes is changing as the products evolve through the use of carbon-ceramic materials. This is especially prevalent in electric vehicles and high performance vehicles. The surge in demand, especially for EVs, could benefit Surface as these are the types of brakes it specialises in.

Furthermore, Surface is in an exciting position as it has some patents pending for the application of this technology and this could help boost future performance.

Speaking of performance, Surface has a decent track record too. Although I do understand that past performance is not always an indicator of the future, I am pleased to see it has increased revenue and profit for the past three years.

As a penny stock, Surface is prone to more volatility than more established, larger businesses. This is where one of my bigger concerns comes from. There is a high likelihood that a larger, more established firm in the automotive space could be better equipped and come to dominate the brakes market, in my opinion.

Another issue I have for Surface is that of the current economic outlook. As the world economy struggles, could the rush towards newer and electric vehicles slow down? If so, this could negatively impact demand for Surface’s products as well as its performance and share price growth.

A penny stock I’m keeping on my watch list

I’ve decided to keep Surface Transform shares on my watch list for now. There is a lot to like about the business and things seem to be heading in a positive direction. Despite this, I want to learn a bit more about the business and see another couple of trading updates at the very least before revisiting my position. I especially want to see how the business is performing in more detail against the current backdrop of economic issues.

I’ll be keeping a close eye on developments at Surface Transform but I do like penny stocks, and already own a number of them as part of my holdings.

The post Should I buy this penny stock for long-term growth and returns? appeared first on The Motley Fool UK.

CleanTech Lithium

Electric vehicle (EV) makers like Tesla and NIO remains extremely popular shares today. But as competition among US and Chinese manufacturers intensifies the risk to investors’ capital is also rising.

For this reason I’d rather find other ways to ride the EV boom, like investing in companies that make parts for these cleaner vehicles. Opening a position in producers of key commodities like copper, nickel, and cobalt is another option for me.

With this in mind I’m giving CleanTech Lithium (LSE:CTL) a close look. Buying mining shares comes with a high degree of operational risks. But I believe the potential rewards of investing in this penny share make it an attractive place to spend my cash.

The business owns several lithium assets in Chile, and recent drilling work at its Laguna Verde mine has got me especially excited. Last month the Alternative Investment Market (AIM) stock lifted its JORC* resource estimate there to 1.8m tonnes of lithium carbonate equivalent. This would support annual production of 20,000 tonnes over a 30-year mine life.

The business also expects to release updated JORC resource numbers from its Francisco Basin project in the current quarter. Analysts at broker Fox Davies Capital believe CleanTech has the potential to produce 40,000 tonnes of lithium across its assets within a decade.

Getting through the exploration and development phases is highly expensive. And any setbacks can put huge strain on miners that aren’t generating revenues. But most recent financials suggest the company has the financial headroom to get its projects off the ground (it had cash of £12.4m on the balance sheet at the end of 2022).

* The Joint Ore Reserve Committee (JORC) code is an established framework for reporting mining exploration results.

Surface Transforms

Brake manufacturer Surface Transforms (LSE:SCE) is another penny stock I’d buy to get exposure to the auto market. In this case, revenues could soar as sports car sales balloon. Analysts at Statista expect sales of fast cars to rise 11% globally between now and 2030, to $70.7bn.

The business is rapidly hiking production capacity to meet growing demand from carmakers. By next month it expects its production lines to support £50m worth of annual sales.

But this is just the beginning: it is making progress on opening a new factory that will take yearly sales to £150m by 2026.

Sales of Surface Transforms’ carbon-ceramic disc brakes rose by 14% between January and June, with volumes rocketing 80% due to those capacity increases. The company’s patented products have significant advantages over iron brakes like reduced wear and weight and better vehicle handling. So demand from major automobile OEMs should remain strong.

Profits here could disappoint in 2023 and 2024 as the global economy splutters. But as a long-term investor, I still believe the AIM company is a top stock to buy.

The post 2 top penny stocks I’d buy to hold to 2030! appeared first on The Motley Fool UK.

I think they could deliver spectacular investor returns over the next decade.

Surface Transforms

The global sports car market looks set for rapid growth as the number of high net worth individuals soars. But investing in a motor manufacturer carries high risk as the market is super competitive.

So I’d rather invest in companies that make components for these car builders. Surface Transforms (LSE:SCE) is one such business I have my eye on, a penny stock that manufactures ceramic brakes for high-performance vehicles.

The business is steadily ramping up capacity to better exploit this fast-growing market, too. By 2026, it hopes to have £150m worth of sales capacity, up from the £50m that it hopes to have in operation by the second quarter.

Bear in mind, though, that earnings could disappoint in the near term should broader production issues among major car producers continue.

European Metals Holdings

The business of mining is extremely unpredictable and earnings forecasts therefore are fragile. Exploring for mineral deposits, developing mines, and finally pulling raw materials from the ground is highly complicated business.

But I’m still tempted to invest in European Metals Holdings (LSE:EMH). This mining company is in the process of developing Czechia’s Cinovec lithium project, said to be Europe’s largest resource of the metal.

This creates huge earnings potential. Long-term lithium demand is tipped to soar as sales of electric vehicles (EVs) takes off. The element is a key material in car batteries.

On top of this, I like the geographic position of this particular lithium stock. As the map below shows, it’s on the doorstep of some of the world’s biggest motor manufacturers.

Last week Cinovec was classified by the European Union as a strategic project, too. This gives it priority access to funding from the bloc. All things considered I think now’s a great time to buy this penny stock.

City Pub Group

UK leisure stocks face an uncertain 2023 as the cost-of-living crisis endures. This includes City Pub Group (LSE:CPC), a pub chain that operates 44 establishments across Southern England and Wales.

That said, I believe its focus on the premium end of the pub market could help it weather the storm. More affluent consumers have more money to spend during economic upturns and downturns.

In fact latest financials came as massive reasurrance to investors. City Pub Group saw like-for-like sales growth accelerate to 7.8% compared with 2019. Results would have been even better had it not been for rail strikes.

Brits are spending higher proportions of their income on leisure activities like going out for a pint or a cocktail. I think this penny stock could be a great way to capitalise on this theme.

The post 3 penny stocks I’d buy today and hold for 10 years! appeared first on The Motley Fool UK.

In 2022, for example, S&P Market Intelligence believes lithium demand will rise to 641,000 tonnes versus supply of 636,000 tonnes. The pace at which electric vehicle sales — and by extension demand for the critical battery material — are increasing means that the lithium market could remain in deficit well beyond this year.

Things are looking good for Atlantic Lithium, then, a company that operates the Ewoyya lithium project in Ghana. Drilling results from the asset have remained highly promising, a theme that has helped the penny stock gain 75% in value over the past year. Though remember that any setbacks in developing Ewoyya could send Atlantic’s share price down.

Another penny stock on my watchlist

I think auto parts builder Surface Transforms (LSE: SCE) could also help me make big returns this decade. The engineer isn’t a specialist in the field of electric vehicles, though. Instead it manufactures ceramic brakes that help high-performance vehicles stay glued to the road. It’s therefore well placed to capitalise on rising sports car demand.

Latest financials from Aston Martin underline how strongly sales of such vehicles are rising as the number of high-wealth individuals around the globe increases. The luxury carmaker said that it boasts “a healthy orderbook for all core vehicles” and that it plans to sell 6,600 vehicles via its wholesale channels in 2022, up 7% from last year’s levels.

Surface Transforms has experienced some production troubles of late due to issues at one of its newly-commissioned furnaces. Such problems are a constant threat to engineers like this that can hit revenues hard. However, I think the firm’s manufacturing expansion programme could in the long term help to supercharge profits as sports car sales grow.

The film star

You might not have heard of penny stock Facilities by ADF (LSE: ADF) before. This low-cost share only began trading on the London Stock Exchange in January. But it plays a crucial role in bringing our favourite films and TV shows to the screen. Put simply, it rents out specialist vehicles and trailers that are critical in the production process.

We’re talking about mobile make-up rooms, costume trailers and production vans, that sort of thing. And today the business is thriving thanks to “continued robust demand for film and high-end television” in the UK. In fact it advised in February that profits would beat expectations in 2021 thanks to a strong end to the year. Equipment failure is an ever-present risk that could damage future sales, but as things stand, business is going swimmingly.

And I think it could prove a highly lucrative pick for the long term as investment in British TV and film production heats up. Amazon, for example, has just signed a multi-year contract to make programming for its Prime streaming service at Surrey’s Shepperton studios in the latest example of this trend.

The post 3 penny stocks to buy in March appeared first on The Motley Fool UK.

Investor appetite for low-cost UK shares like penny stocks has been particularly damaged by the worsening outlook. This is perhaps understandable as smaller-cap stocks (broadly speaking) don’t have the sort of financial strength as larger-cap ones.

That’s not always the case, of course. Indeed, I feel many economically-robust penny stocks have been unjustifiably sold off along with more vulnerable ones. The good news for me is that I’ve a chance to buy some brilliant shares at a knock-down price.

2 penny stocks on my radar

I think these UK shares are some of the best penny stocks to buy following recent selloffs:

#1: Cash rich

I can fully understand why Surface Transforms’ (LSE: SCT) share price has fallen 10% over the past month. The automotive industry has been particularly affected by supply chain disruptions and, more specifically, by a shortage of semiconductors. As a long-term investor though, I think this weakness represents an attractive dip-buying opportunity.

The number of high-wealth individuals is expected to rocket over the next decade. This means that sports car sales are also tipped to rise strongly, something which bodes well for Surface Transforms. The ceramic brakes it manufactures are widely used in the production of high-performance vehicles.

Surface Transforms had a reassuring £17.2m worth of cash on the balance sheet as of June. This should assuage any fears over the company’s flexibility should the car industry remain under the cosh. The penny stock’s healthy balance sheet should also help it to make good on its revamped manufacturing strategy.

It also plans to accelerate the development of its Knowsley factory to delivery £50m worth of annual sales by 2023. That compares with £35m today.

#2: Building materials

The Brickability Group (LSE: BRCK) share price recently fell below the £1 penny stock limit. Indeed, it’s down around 5% over the past month as concerns over rocketing inflation have fed concerns that the Bank of England could raise rates.

Increasing interest rates would certainly have an adverse impact on broader homes affordability, something that could filter through to affect construction rates. While the risks have risen I still believe that the brick manufacturer’s profits outlook remains extremely attractive.

Interest rates should remain ultra low compared to historical standards, after all. So I expect new homes demand to remain pretty robust. And support from government from first-time buyers remains in play of course.

Don’t forget that the government plans to create 300,000 new residential properties a year by the middle of the decade. And it’s taking steps to reduce red tape to make this a reality. So I expect Brickability to deliver excellent shareholder profits in the coming years.

The post 2 of the best-value penny stocks to buy right now! appeared first on The Motley Fool UK.

The low-carbon class isn’t the only car segment tipped for explosive growth in the coming years, however. As the number of high-net-worth individuals across the world booms, so does demand for sports cars. Analysts at Statista reckon 858,100 high-performance vehicles will roll off production line in 2025. That’s up from an anticipated 655,400 this year.

This is why I think Surface Transforms (LSE: SCE) is one of the best automotive-focused UK stocks to buy right now. It’s a penny stock that manufactures cutting-edge carbon ceramic disc brakes for cars (and to a lesser extent for planes).

Contracts are stacking up!

Sales are rocketing at the business right now as the auto industry recovers from the troubles of pandemic-hit 2020. Revenues soared 34% year-on-year in the first half of this year, above Surface Transforms’ prior expectations. And the AIM company continues to rack up contracts with major original equipment manufacturers (OEMs) to keep the top line soaring.

Just today Surface Transforms announced that it’s been selected as a tier one supplier of carbon ceramic brake discs to an existing major customer. The contract is worth €5m over a four-year period beginning in 2024. And the penny stock has described the award as significant: it’s the first time the multi-year ‘carry over’ agreement has been implemented with said customer since the initial contract was inked in 2019.

Thursday’s news follows hot on the heels of a major contract signed with a new OEM just a fortnight ago too. That £20m, tier one contract is also due to commence in 2024.

Why Id buy this penny stock right now

Today’s fresh contract news isn’t the only thing to a light a fire under Surface Transforms’ share price today. The stock was last trading 7% higher on Thursday at 70p per share.

The stock has also jumped after the firm announcing major changes to its manufacturing strategy. This includes accelerating the fit-out of its Knowsley factory by a full 18 months. The aim is to achieve sales capacity of £50m by 2023. This compares with £35m at present. It will also cut costs associated with the fit-out by around £10m and repurpose the facility as a single production line project rather than one made of independent manufacturing cells.

Now, its operations are highly cyclical and any economic downturns could significantly hit demand for its product. Its markets are also very competitive and that poses an extra danger to the top line. Still, at the moment I think there’s a lot to like about this stock. It’s why I’m thinking of adding it to my Stocks and Shares ISA right now.

The post Here’s why I’d buy this soaring penny stock right now! appeared first on The Motley Fool UK.

#1: A leading light in responsible investing

There’s no doubt that responsible investing is becoming more and more important for share pickers. Plenty of evidence exists to back up this line of thought too. And green stocks that are helping to solve the climate crisis are particularly popular right now. This is where Renewi (LSE: RWI) comes in, a penny stock that helps to turn waste products into something useful again. Recycling is a critical part of lawmakers’ strategies to help the environment and Renewi is riding this phenomenon in both Europe and North America. Be aware though, that this UK share has a lot of net debt (around €350m worth, according to latest financials) to tackle. It’s a sum that could have a significant impact on the firm’s future growth plans, as well as the size of dividends.

#2: Life in the fast lane

A bright outlook for car production makes me think Surface Transforms (LSE: SCE) could be another top penny stock for me. Around 92m light vehicles rolled off production lines across the globe in 2019, according to Statista. The research house thinks that strong demand in Asia will drive production to 110m vehicles by 2025 and to 117m by 2030. It’s an environment that will play into the hands of Surface Transforms, a company that builds ceramic brakes for major car manufacturers. I like the steps the business has taken to exploit this ripe trading landscape by building capacity at its site just outside Liverpool too. Product failure is a risk for any company. But a malfunctioning of this UK share’s goods might pose a significant safety risk. And as a consequence, any problems on this front could be particularly catastrophic for the brake-maker.

#3: A penny stock for the video games explosion

I also think Bidstack Group’s (LSE: BIDS) a penny stock that could enjoy mighty profits growth this decade. I myself bought games developer Keywords Studios this month to make money from the staggering growth in the video games market. And I’d buy this UK tech share too, one that allows companies to advertise their brands, products and services during in-game play. The company has added 14 new titles to its portfolio since the end of 2020. And it is also making headway in the fast-growing e-sports arena, an industry that’s tipped to grow by around 8% a year by 2024. Even if some of its rivals have better financial (and thus technological) resources — a problem that could result in lots of failed business bids and client losses — I still think this penny stock is a great buy for the tech revolution.

The post 3 penny stocks I’d buy appeared first on The Motley Fool UK.

The problem with cheap UK shares like these is they can experience huge price volatility. However, eagle-eyed investors can use this characteristic to their advantage. Such choppiness means penny stocks tend to be avoided by many investors, despite their excellent long-term profits outlooks.

Consequently those who are on the ball can nip in and grab a bargain or two. So here are a couple of top penny stocks I’d happily snap up for my own Stocks and Shares ISA today.

A penny stock for soaring sports car sales

Investing in the sports car market is a brilliant idea for UK share investors like me, in my opinion. But rather than looking at the Aston Martin share price, for instance, I’d much rather buy shares in Surface Transforms (LSE: SCE). This engineer produces patented carbon-ceramic materials and brakes that allow drivers to keep their performance vehicles on the road.

The global sports car segment looks set to experience stunning growth over the next several years, at least. Analysts at Knowledge Sourcing Intelligence reckon the market will expand at a compound annual growth rate of 10.1% through to 2025 as the number of millionaires and billionaires continues to rocket. Therefore, Surface Transforms can expect demand for its products from OEMs to keep flying.

This penny stock’s goods are proven to be of an extremely high standard. But remember that a failure of its critical components could cause demand to fall off a cliff. Right now, Surface Transform’s shares sell for 74.5p apiece.

Making a bid for big returns

The Covid-19 outbreak has improved the long-term outlook for a great many industries. The global video games market is one of these, with demand for entertainment software booming from new and existing gamers during lockdowns. Studies suggest that rampant sales growth is here to stay too.

For this reason I’d invest in Bidstack (LSE: BIDS), a tech company which allows advertisers to beam their messages into virtual worlds. Indeed, this particular penny stock could perform really strongly in the next few years as advertising spending usually recovers very strongly during the early stage of economic recoveries. Today this UK share trades at 5.25p per share.

Remember though, this UK share is smaller than many of its competitors. This means it has less firepower to develop better technology than its rivals. This issue could well affect its ability to secure business in the future.

The post 2 UK penny stocks I’d buy with my new year ISA allowance! appeared first on The Motley Fool UK.

Last March, Surface’s penny stock status was even more assured since it was trading at 16p. I have been a shareholder in Surface Transforms since 2018, and I have been delighted with the 388% price rise over the last 12 months. But, I am not cashing out now as I think there are more price gains to come.

Electric vehicles need brakes

Surface’s brakes find use in high-performance vehicles, be they petrol or electric powered. Brake discs are one component that will not become redundant if the internal combustion engine disappears.

Surface has been expanding its brake-disc production capacity from handling £4m worth of sales to circa £20m. The expanded capacity should be available in the second quarter of this year. Surface has raised £20m this year. The bulk of these funds will build revenue manufacturing capacity to approximately £35m per year in 2022. The rest will support the working capital requirements of ramping up to the £20m in expected sales per annum mark.

This is not a build it, and they will come strategy. Surface has been steadily winning contracts to supply brake discs to car markers. An eighth manufacturing supply contract was signed in 2020. A ninth is in process. These will exhaust the capacity of a £35m sales per year facility by 2024 if things go to plan. Surface has a potential contract pipeline that would require something like a £75m facility in 2024, rising to close to £100m by 2026.

Penny to pound stock?

Surface Transforms reported revenue of £1.45m for the 2019 fiscal year. Eyeing revenues almost 100 times higher in six years is ambitious. Given the stepwise progression and the success achieved already in scaling up capacity, I think it is achievable. The potential demand is also there for the taking. 

A single highly profitable manufacturer dominates the high carbon-ceramic brake disc market. This manufacturer does ownership links with some carmakers. Surface is a credible alternative, and its position as an independent supplier strengthens its case for continuing to grab market share.

But there are, of course, risks. The market-dominating supplier is powerful and may react aggressively to losing market share. Increasing manufacturing capacity, particularly towards the £100m revenue mark, requires capital. Existing shareholders have the risk of being diluted as funds are raised by issuing new shares. Returns can be gobbled up by interest payments on debt raised to pay for factory capacity.

The coronavirus pandemic might leave lasting scars on the global car market, particularly the luxury segment. Surface’s broader ambitions do rely on the auto market being in fairly good health fairly soon. Increasing sales requires increasing working capital, so Surface will have to manage its cash flows closely when ramping up its output. 

Surface’s expansion to £35m worth of sales by 2024 at the earliest seems fairly assured. That would be enough for me to add Surface to my portfolio today. The potential for more growth makes me think this penny stock will be a bonafide pound one someday.

The post 1 penny stock I’d buy today appeared first on The Motley Fool UK.

Tom Rodgers: Sylvania Platinum

Sylvania Platinum (LSE: SLP) is one of those stocks I think will become increasingly strategically important. The platinum group metals the company processes at a low cost from its base in South Africa are used in practically every modern electrical appliance. Prices for rhodium and palladium have rocketed to near all time highs this year as demand outstrips supply.

With $55m cash and no debt, profits and earnings per share both doubling from 2019 to 2020, and investors in line for a special windfall dividend in 2021, this is one of the most obvious micro-cap no-brainers I’ve seen for years. 

Tom Rodgers owns shares in Sylvania Platinum.

Zaven Boyrazian: Tristel

Throughout 2020, medical centres around the world have adopted far more rigorous cleaning standards. In light of recent news, a Covid-19 vaccine may soon be ready.

However, even after this pandemic comes to an end, the increased disinfecting practises are likely to continue with stricter legislation. This creates a vast opportunity for Tristel (LSE:TSTL).

The firm manufactures infection prevention products that are widely used throughout hospitals. Given each of their products are consumables, they create a recurring income from existing customers.

As all products require FDA approval, Tristel faces little competition within a rapidly expanding market space.

Zaven Boyrazian does not own shares in Tristel.

Kirsteen Mackay: Tracsis

Tracsis (LSE:TRCS) is a UK tech stock that makes software specifically designed for the transportation industry, with railways being a main beneficiary. The company has been publicly listed for 13 years and its share price has risen approximately 1,075% during this time.

With the pandemic pausing travel, this has caused a sharp shock to the company, but it’s still winning government contracts. Although the Tracsis share price has seen extreme volatility this year, I think it will renew its growth trajectory once normality resumes. It has a £150m market cap. Its price-to-earnings ratio is 28 and earnings per share are 17p. 

Kirsteen does not own shares in Tracsis.

Edward Sheldon: Cerillion

My top micro-cap stock for November is Cerillion (LSE:CER). It’s a leading provider of cloud-based (SaaS) billing, charging, and customer management systems.

Cerillion appears to have plenty of momentum at the moment. In October, the group advised that trading in the second half of the year ended 30 September was strong. During this period, the company signed its largest-ever contract. Meanwhile, it said that its back-order book was at record highs and that it expects revenue and adjusted EBITDA for the year to be ahead of current market expectations.

At the time of writing, Cerillion has a market cap of under £100m, meaning there’s plenty of potential for growth. All things considered, I think this micro-cap stock looks pretty exciting.

Edward Sheldon has no position in Cerillion.

Rupert Hargreaves: Inspecs

I have my eye on UK-based designer, manufacturer and distributor of eyewear frames, Inspecs (LSE: SPEC).

The UK eyewear market is vast, and it’s only expected to continue to expand over the next few decades. This growth is projected to show through in Inspecs’ top line next year. Sales set to jump by a third in the next two years.

A cash-rich balance sheet could also hint at the prospect of large dividends from this consumer-focused business.

In my opinion, as Inspecs’ sales expand over the next few years, the stock has the potential to jump higher.

Rupert Hargreaves does not own shares in Inspecs.

Royston Wild: Bloomsbury Publishing

Bloomsbury Publishing is a share I’d buy today and hold for all time. It’s not just the eternal appeal of the Harry Potter franchise which makes this UK share a great long-term buy. I’m also encouraged by the huge profits potential of its move into academic publishing.

Bloomsbury’s shares recently soared to their most expensive since February on some blowout trading numbers. First-half earnings clocked in at twelve-year highs as sales of the publisher’s online books and e-books rocketed. The performance of its digital academic products was also impressive as institutions switched to remote learning due to the pandemic. As a consequence sales of these particular products surged by almost half year on year.

With organic sales rocketing, and its cash-packed balance sheet also creating chances for more profits-boosting acquisitions, I reckon Bloomsbury is a terrific buy right now.

Royston Wild does not own shares in Bloomsbury Publishing.

Kevin Godbold: MPAC

Global packaging company MPAC (LSE: MPA) aims to become a market leader in the “pharmaceutical, healthcare, food and beverage sectors.”

I think MPAC’s niche in those defensive sectors looks attractive. The business is bouncing back from the first wave of Covid-19 lockdowns. And in September the directors announced an acquisition in the US, followed in October by the relaunch of the MPAC brand along with a new corporate website.

City analysts expect earnings to resurge more than 50% in 2021. And with the stock near 400p, the forward-looking earnings multiple is just below 11. With growth on the agenda, I’d buy the micro-cap stock for November and beyond.

Kevin Godbold does not own shares in MPAC.

Jonathan Smith: Oxford Metrics

Oxford Metrics (LSE: OMG) is a UK based software and data analytics company, with offices worldwide. It has an asset management software arm called Yotta, that has been performing very well in recent times. I feel the business is well set to perform well even during an extended pandemic situation. The firm has no debt, and cash balances of over £14m as of Q2 2020. 

The nature of the business also means strong ‘annualised recurring revenue’, that was up 14.6% versus last year. This should aid continued growth in the future. The share price has doubled in value over the past 5 years.

Jonathan Smith does not own shares in Oxford Metrics.

Roland Head: Brickability

Recent results suggest the housebuilding market is enjoying a rapid recovery from the COVID-19 slump. One company I think could benefit from this strong demand is Brickability (LSE: BRCK).

This £115m firm sells bricks, roofing, and other building materials to housebuilders. Growth areas include heating, plumbing and doors. Chairman John Richards says that the company is seeing a “V shaped” recovery and the firm has just issued a solid set of half-year results.

The shares trade on just seven times 2021 forecast earnings and offer a well-covered 5% yield. I’d be happy to buy at these levels.

Roland Head does not own shares in Brickability.

Paul Summers: Churchill China

With things looking positive on the coronavirus vaccine front, my pick of the micro-cap stocks this month is ceramic tableware supplier Churchill China (LSE: CHH). 

Naturally, the £140m cap has seen its revenue, profits, and share price walloped by the virtual shutdown of the hospitality sector in 2020. However, I think the potential rewards now outweigh the risks.

While a full recovery won’t be immediate, earnings are expected to bounce back in 2021 as pubs, restaurants and hotels reopen. In the meantime, this high-quality, ‘family-owned’ company has cut costs where it can and remains debt-free.

Paul Summers owns shares in Churchill China.

Matthew Dumigan: Tatton Asset Management

Since flotation in 2017, shares in Tatton Asset Management (LSE: TAT) have been rather volatile. However, over the three years, the company’s share price has risen 45%, delivering a tidy return to investors. 

The company provides a range of on-platform only services ranging from discretionary fund management and compliance to mortgage provision. What’s more, the firm’s recent half-year results report was positive, with group revenue increasing by 12.6% year-on-year and adjusted operating profit rising by 21.9%.  

Ultimately, I’m impressed by the company’s earnings growth and I reckon Tatton can continue to deliver a strong performance in the years to come.  

Matthew Dumigan does not own shares in Tatton Asset Management.

G A Chester: Trans-Siberian Gold 

Trans-Siberian Gold (LSE: TSG) is a small but profitable miner with ambitions of becoming a premier mid-tier operator. Its strategy is to maintain a strong balance sheet, while both investing in growth opportunities and paying a base level of sustainable dividends through the commodities cycle. 

The base level’s set at around $3m a year (a 2.5% yield at the current share price), but the company regularly distributes more. This year’s interim dividend alone was $7m (5.9% yield). 

With its growth prospects and record of distributing surplus cash to shareholders, Trans-Siberian Gold is my top pick in the smaller companies space. 

G A Chester has no position in Trans-Siberian Gold.

James J. McCombie: Surface Transforms

Surface Transforms (LSE: SCE) recently won a contract worth £27.5m to supply an eighth global automotive customer with its high-performance carbon-ceramic brake discs. As a result, revenues should quadruple to £8m in 2022 versus 2020, and earnings per share should turn positive.

The high-performance brake market is worth £200m and growing, but a single supplier is dominant. Surface is now a credible alternative for manufacturers looking to diversify, and I think it will increase its market share significantly. 

Since electric vehicles need brake discs, Surface also looks good for the long-term, and I think it’s a great micro-cap stock pick.

James J. McCombie owns shares in Surface Transforms.

The post Top micro-cap stocks for November appeared first on The Motley Fool UK.