A rising oil & gas star

First on the list is Afentra (LSE:AET). The business focuses on acquiring and redeveloping mature upstream oil & gas assets in Angola. Its strategy is to apply modern operating procedures and technologies to maximise extraction rates and extend the production life cycle of oil & gas fields.

This unique approach to doing business has translated into an impressively low production cost per barrel. And when combined with additional discoveries near its core operations, the Peel Hunt team suspect the Afentra share price could surge to 85p if business continues with its current operating momentum.

Compared to where the small-cap’s trading today, that’s a 72% projected rise!

Of course, forecasts are never set in stone. And even with a bullish stance, the experts have still identified several key risks.

Beyond commodity price sensitivity, Afentra carries significant execution risk when it comes to identifying oil & gas assets as acquisition targets. After all, if the group fails to reach its expected extraction efficiency, the buyouts may not actually build shareholder value.

It’s also important to recognise that Angola, while not as bad as other countries, isn’t the most politically stable nation. And that can translate into a volatile regulatory environment, which can adversely impact Afentra’s operations.

Engineering opportunities

Another small-cap stock on Peel Hunt’s radar is Trifast (LSE:TRI). With a market-cap of just over £100m, the engineered fastening solutions and supply chain service business appears to have plenty of room for growth. And that opinion seems to be backed by the other analysts following this stock with an average share price target of 130p – roughly 73% ahead of current levels.

The bull case rests on management’s ability to restore profit margins through pricing action and supply chain optimisation. In fact, the company’s set a medium-term target of rebuilding EBIT profitability back above 10% from the 6.8% reported in its latest results, even with softer market conditions.

There are already some early signs of progress being made on this front, with leadership recently reiterating its margin objectives. And as end-market conditions begin to normalise, the business could begin an impressive recovery.

Having said that, this once again depends on execution risk. If management’s strategy to restore profitability fails, or renewed inflation emerges across input costs like freight, the self-help progress made could ultimately be offset.

Similarly, Trifast has little control over the cyclical nature of its end markets. And should the trading environment within key sectors like automotive and broader industrials remain softer for longer, investor sentiment could remain weak as the recovery journey is extended.

The bottom line

As we’ve recently seen with companies like Rolls-Royce investing early in a successful recovery story can be immensely lucrative. But out of these two Peel Hunt picks, Afentra looks like a more promising opportunity, in my mind. Therefore, I think investors exploring the world of small-cap stocks may want to take a closer look.

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The company currently trades at around 67p per share with a market-cap of just over £90m. Needless to say, it’s a pretty small business. But if the analyst forecasts are correct, the penny stock could be on track to see its earnings skyrocket in 2025, causing the share price to more than double to 140p in the process.

Considering many penny stocks lack a revenue stream let alone have positive earnings funding a dividend, this sounds like a pretty extraordinary opportunity. So should investors consider buying shares today?

A turnaround opportunity

Seven years ago, Trifast shares sat comfortably in the small-cap territory. But since then, the industrial fastenings manufacturer has encountered a series of challenges that have caused revenue and earnings to shrink. This includes supply chain disruptions, inflation, inventory destocking from customers (particularly in Asia), and a leadership change that saw the sudden departure of Mark Belton as CEO in early 2023 after 23 years of service.

The impact of these headwinds is clear when looking at the Trifast share price since 2018, falling by around 75%. However, as dire the situation’s been, the group’s fate may be on the verge of a long-awaited turnaround.

The new management team’s busy executing a new business strategy focused on restoring profit margins. Subsequently, Trifast’s in the middle of an operational restructuring. Unfortunately, that means some employees have been losing their jobs. But these decisions appear to be making a positive impact on the business.

Looking at its latest interim results, gross profit margins have expanded along with underlying operating margins. Subsequently, the return on capital employed has also enjoyed a nice boost.

Sales growth remains elusive. However, if analyst projections about underlying earnings per share jumping from 1.62p to 5.77p in 2025 prove accurate, this may not matter. But how realistic is this projection?

Forecasts aren’t guaranteed

A 256% surge in earnings per share is quite a big ask. But Trifast might actually be capable of delivering. After all, the underlying EPS in its interim results landed at 2.94p.

However, it’s important to note that only one institutional analyst is currently following this business. As such, the 140p 12-month share price target is just one opinion.

Delivering on earnings expectations will most likely help boost the penny stock. But with earnings forecast at 5.77p and a share price target of 140p, that puts the projected price-to-earnings ratio at 24.3. Given the penny stock currently trades closer to 14 times earnings, the company will likely have to convince investors of its long-term potential to justify a premium valuation. And given the group’s recent track record, that could be quite a difficult task.

The bottom line

Trifast appears to be moving back in the right direction, but the firm still has a long way to go. Personally, I’m not convinced the stock will reach 140p by this time next year. However, if management can continue to make strides in margin expansion while also resparking revenue growth, this penny stock could be worth watching.

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Both are tipped to deliver spectacular earnings growth, as well as provide solid dividend income, in the next two to three years. And they appear to be dirt cheap at current prices.

Trifast

Trifast (LSE:TRI) manufactures industrial fastenings. And its share price collapsed at the start of the year. It fell as weakness across multiple end markets and geographies hammered sales of its products.

Touch conditions might prevail as Chinese economy splutters. But analysts expect sales to accelerate sharply as falling global interest rates boost demand in the key automotive, electronics, and smart infrastructure markets.

Encouragingly these sectors look poised for solid growth over the long term too. This could help its share price balloon from current levels.

Trifast is tipped to increase earnings by a spectacular 277% this financial year (to March 2025). Healthy growth of 40% and 21% is tipped for fiscal 2026 and 2027, respectively, as well.

As a consequence, Trifast’s price-to-earnings (P/E) ratio topples over the period, from 13.6 times this year to 9.7 times the year after, and 8 times the year after. This is based on its current share price of 82p.

On top of this, the manufacturer’s price-to-earnings growth (PEG) multiple remains below 1 throughout the period. Any reading under this threshold indicates that a share is undervalued.

Penny stocks aren’t famed for offering decent dividends. This is because small-cap shares typically invest any spare cash they have for growth rather than distributing it to shareholders.

However, a strong balance sheet means Trifast is tipped to offer decent dividends and growing through the next three years too. The dividend yield is 2.7% for this year, and rises to 3% and 3.3% for financial 2026 and 2027.

Facilities by ADF

Facilities by ADF (LSE:ADF) is another rare penny stock that offers investors a strong and growing dividend.

The annual reward is expected to rise by almost three-quarters next year. And so a 2.8% dividend yield for this year leaps to a market-beating 4.9% for 2025.

This prediction reflects City estimates that earnings will rise 264% and 90% in 2024 and 2025 respectively.

The company provides mobile production facilities to Britain’s creative industries. We’re talking about production offices, make-up vans, and so on. It has significant growth potential as global studios increase investment in Britain’s film and TV industries.

Facilities… is spending on acquisitions to exploit this opportunity too. Be aware, however, that M&A-based growth strategies come with execution risk. And its purchase of Autotrak in August is especially bold — a price of up to £21.3m is huge given the company’s market cap is just over £57m.

At 53p per share, Facilities… trades on a P/E ratio of 10.5 times for 2024. And this topples to just 5.5 times for next year.

With its PEG ratio also falling below 1 for these years, I think it’s a top small cap for value seekers to consider.

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UK trade and manufacturing hit a wall in 2018, and small industrial businesses took the brunt of the crash. The combined effects of Covid and Brexit didn’t help and many businesses folded under the weight of the onslaught. But those that survived are now well-positioned to take the lion’s share as the recovering economy brings fresh demand. 

Mincon Group

When looking at small manufacturing firms with growth potential, one promising mining-related stock always pops up.

Mincon Group‘s (LSE: MCON) a little-known rock drilling company based in Ireland, with 604 employees and £93m market-cap. For almost 50 years it’s been manufacturing all kinds of drilling products for miners, excavators and anyone else that wants to make holes in the ground.

It’s a simple, non-technical business that’s probably seen little change in the past five decades. As a result, it’s unlikely to be the next Nvidia — but it’s enjoyed periods of significant growth in the past. In 2018, the share price reached 153p but plunged soon after and has had mixed results since.

Despite equity increasing steadily over the past decade, the share price is at an all-time low. But it’s in a good industry and compared to earnings, its price is ‘cheap’. With a price-to-earnings (P/E) ratio of only 14, it’s well below the industry average. An improving economy could boost sales, bringing it more in line with the rest of the industry.

Sure, profit margins are half what they were last year but earnings are forecast to grow 20% a year going forward. And with minimal debt and a 4% dividend yield, there might still be life in the old girl. I think there’s good potential in the low-priced shares.

Trifast

Trifast‘s (LSE: TRI) a £97m UK-based company that makes industrial fasteners and category C components — basically, nuts and bolts. Like Mincon, it’s a simple business that’s been around since the 70s with little change to operations. 

Declining income means the company’s recently become unprofitable, with the shares falling 67% in the past five years. But with a low price-to-sales (P/S) ratio of 0.4, it now has lots of room to grow. Last year, it cleared £241m in sales and revenue increased 9.1%, prompting analysts to forecast a 50% price rise in the coming year. And with earnings forecast to grow 103% per annum, things are certainly looking up.

But first, it must climb out of its current hole. Despite paying a dividend of 2p per share, its earnings per share (EPS) is currently running at a loss of 2.8p per share. It’ll need things to improve if it hopes to keep that up. Interim CEO Scott Mac Meekin plans to do just that, “creating an aligned leadership team with the skills and necessary capabilities, visions and drive to maximise 50 more years of success.”

Since the vast majority of industrial manufacturing still requires nuts and bolts, I expect demand will increase as the economy improves. And with revenue and cash flow improving, Trifast may already be on the mend. 

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Industrial fastenings

As a quick introduction, Trifast is an engineering, manufacturing, and distribution business that specialises in industrial fastenings and components to many industries. It has a worldwide presence and operations in the UK, Europe, US, and Asia. Some of the sectors it serves include electronics, automotive, and domestic appliances.

It is worth remembering that a penny stock is one that trades for less than £1. As I write, Trifast shares are trading for 90p. At this time last year, the stock was trading above these levels at 140p, which equates to a 35% drop over a 12-month period.

A penny stock with risks

I believe Trifast shares have dropped in recent times due to macroeconomic headwinds. These headwinds include soaring inflation, the rising cost of raw materials, and the global supply chain crisis. All the issues noted could have a detrimental impact on Trifast’s operations, sales, and performance.

Rising costs of materials could impact Trifast’s profit margins. If costs are creeping up, sales prices and overall sales could be affected. This could then affect performance and returns too.

The global supply chain could see Trifast’s worldwide operations affected, especially from a manufacturing and then sales perspective. Again, this could affect performance and investor returns too.

The bull case and what I’m doing now

So to the positives then. I like Trifast’s business model in that it creates and sells vital components across a multitude of industrial sectors. Furthermore, it has a worldwide presence, which could help boost performance and investor returns. There is still room for it to grow as its primary source of revenue is Europe currently.

Next, Trifast has a consistent record of performance. I do understand that past performance is not a guarantee of the future, however. Prior to the pandemic, performance was robust but has dropped off slightly since. Full-year results for 2022 are due imminently and I will be reviewing them with a keen interest.

Trifast shares would boost my passive income stream through dividend payments. The stock’s current dividend yield stands at just over 2.5%. This is higher than the FTSE 250 average, which is just under 2%. It is worth remembering that dividends are not guaranteed and can be cancelled at the discretion of the business at any time.

Finally, Trifast shares look decent value for money at current levels on a price-to-earnings ratio of 15. There is every chance the recent share price drop has made the shares more attractive and they could bounce back to former highs after the current economic uncertainty subsides.

Overall I like the look of Trifast shares. This is primarily due to the company’s business model, presence, and profile, as well as the dividend payments on offer. I would add the shares to my holdings. I do expect some headwinds due to macroeconomic issues out of its control, however.

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Buying on the dip

I’m considering investing in Serabi Gold (LSE: SRB) following severe gold price weakness that’s pulled its share price lower.

Serabi — which produces the metal from multiple mines in Brazil — plunged to its cheapest since June 2019 in recent sessions. This was prompted by gold values sinking back below $1,900 per ounce.

This shows the risks associated with buying commodities stocks like this. If the price of the underlying raw material falls in value then listed producers can also drop.

It’s quite possible that Serabi’s price could keep falling in respect of this too. Gold has fallen in value because of a strong US dollar and bond yields. A flurry of severe interest rate rises by the Federal Reserve could keep these trends running.

A cheap penny stock

I still think buying Serabi Gold could be a good idea though. At current values of 42.5p per share, the penny stock trades on a forward price-to-earnings (P/E) ratio of just 4.2 times.

I think this is particularly great value, given the range of factors that could send gold values soaring again. The war in Ukraine is creating huge macroeconomic and geopolitical waves that could turbocharge demand for the safe-haven asset again.

There’s also the fact that inflation continues to soar (and often beyond market expectations) despite rate rises by central banks across the globe. Finally, the resurgence of Covid-19 cases in China could push gold through the roof again.

I think there could be plenty of upside for Serabi’s share price right now.

Another cheap UK share on my radar!

Screw, bolt and fasteners manufacturer Trifast (LSE: TRI) faces severe uncertainty as consumer spending sinks. Demand for the products it makes for sectors like consumer electronics could come under significant pressure as a result.

It’s also important to note the difficulties it could face if auto production rates continue to slump. Latest data for the UK, for example, shows manufacturing slump by 100,000 vehicles year-on-year in the first quarter.

A great long-term buy

Still, it’s my opinion that these dangers could be baked into Trifast’s rock-bottom valuation. At 105p per share, this ‘nearly’ penny stock trades on an ultra-low price-to-earnings growth (PEG) ratio of 0.4 times.

As a long-term investor there’s a lot to like about Trifast. I think profits could soar as technologies like electric cars, renewable energy, 5G and electronics rise over the next decade. The business operates all across Europe, the US and Asia too, giving it excellent opportunities to win contracts with major global OEMs.

I think Trifast’s highly cyclical operations leave it well-placed to capitalise on the post-coronavirus economic recovery.

The post £7,000 to invest? 2 cheap UK shares to buy in May! appeared first on The Motley Fool UK.

A bolt from the blue

2022 has so far been a year to forget for Trifast’s (LSE: TRI) share price. The business — a giant in the manufacture of screws, bolts, and other types of fastenings — has plunged to within a whisker of penny stock territory. At 111p per share, it’s down 31% since January trading began.

I think this recent collapse makes Trifast’s share price hard to ignore. City analysts think the firm will follow a 78% earnings rise in this financial year (to March 2022) with a 27% year-on-year increase. This leaves Trifast trading on a forward price-to-earnings growth (PEG) ratio of 0.4 for the upcoming period. Any reading below one suggests that a UK share could be undervalued.

Trifast makes its products for a wide range of applications like consumer electronics, white goods, and automotive. It could therefore see sales slump if the cost of living crisis continues to worsen. However, as a long-term investor I find the business highly attractive. And I believe its share price today makes it something of a steal.

I like the fact that its end markets should grow strongly over the long haul on account of soaring emerging market wealth. I also like Trifast’s commitment to global expansion through acquisitions (in August it acquired US distributor Falcon Fastening Solutions for £6m to boost its North American footprint). And I think demand for the company’s fastenings could surge on the back of the electric car revolution too.

Another nearly penny stock I’d buy

I’d also use Greencore Group’s (LSE: GNC) plunge towards the 99p penny stock limit as an opportunity to buy. A forward price-to-earnings (P/E) ratio of 13.8 times doesn’t look shockingly cheap on paper. But recent market volatility has driven the food producers’ dividend yield through the roof. For 2022, the readout sits at a healthy 4.8%.

Any fresh pickup in the pandemic could threaten the recent recovery at Greencore. The food to go specialist saw revenues tank during Covid-19 lockdowns as people stayed at home. But as things stand, the outlook is pretty rosy for the business (City analysts think earnings here will rise 11% in 2022).

I’d buy Greencore because changing consumer habits mean the ‘food on the move’ marketplace is tipped to resume its strong growth of the last decade. Analysts at Mordor Intelligence think the ready-to-eat segment will expand at a compound annual growth rate of almost 5% between 2022 and 2027. And pleasingly Greencore is investing heavily to help it capitalise on this opportunity (it’s spending £30m to increase capacity at three of its manufacturing sites following recent contract wins). I think its plunge to 116p could make the company too cheap for me to miss.

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A top electric vehicle stock

The electric vehicle (EV) revolution offers UK share investors like me many money-making possibilities. The International Agency predicts there will be 145m electric cars on the world’s roads by 2030. That’s up significantly from the 11m in 2020. It says the number could even reach 230m, if governments get serious on meeting their emissions targets.

I myself have invested in car parts manufacturer TI Fluid Systems and I’m considering buying Trifast (LSE: TRI) too. This particular company makes screws, bolts and other fastenings that can be found in consumer electronics, solar panels, white goods and a broad host of other products. But Trifast’s single-biggest money spinner is in the manufacture of parts for light and heavy vehicles. Collectively these account for 35% of group revenues.

Trifast makes bespoke products for autos and so it’s built strong relationships with carmakers all over the globe. This is especially critical as OEMs select trusted suppliers to help them overcome the challenges that these new technologies create. I think Trifast’s in great shape to exploit the EV boom too because low-emission vehicles require more fastenings than conventional petrol-powered vehicles.

My main concern from an investment standpoint is that this UK share doesn’t come cheap. At current prices it trades on a forward P/E ratio of 26.8 times. This is the sort of high valuation that could prompt a sharp share price reversal if trading conditions worsen. For example, if broader supply chain problems in the auto industry hit demand for its fastenings and revenues subsequently fall.

Another fast-growing frontier

Still, from a long-term perspective I think Trifast has a lot to offer. It’s a view I take with regards to gaming software designer Frontier Developments (LSE: FDEV) as well. I expect earnings here to rise strongly as video games sales soar. Analysts at GlobalData think the global games industry will be worth $452bn by 2030. That’s double what the market was estimated to be worth last year.

Frontier Developments has a plethora of popular titles in its stable. Games within the Jurassic World  Evolution franchise and Planet Coaster and Planet Zoo canon sell in huge numbers and it has some massive titles coming down the pipe soon. These include games under the hugely-popular Warhammer wargaming banner and a new F1 motor racing motor management game.

It’s worth bearing in mind that the video games market is highly competitive and strong sales are never guaranteed. Indeed, a crowded release window at the end of 2021 prompted weaker-than-expected sales of Jurassic World Evolution 2 and a subsequent scaling down of full-year revenues forecasts. That said, I still think the company’s long track record of success makes it an attractive buy for the video games boom. It’s one of a selection of white-hot UK growth shares I have my eye on.

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Could this threat be baked into Trifast’s current valuation, however? I think it could. At current prices of 140p, the bolt-builder trades on a forward price-to-earnings growth (PEG) ratio of 0.2. This leaves a wide margin of error for earnings projections to miss, in my opinion (City analysts currently expect profits here to rocket 81% in the fiscal year to March 2022).

As a long-term investor I like Trifast a lot. Revenues might suffer in the near term if car manufacturing issues continue. But I think its sales outlook for this decade is pretty bright as demand for zero emissions vehicles booms. I also like the company’s exposure to other fast-growing end markets like energy, medical, and infrastructure.

A high-risk penny stock I’m looking at

Bingo hall operator Rank Group (LSE: RNK), which also trades at 140p, is a share that’s not the faint of heart. The gambling giant suffered a shocker in 2020 and early 2021 as the Covid-19 crisis forced the closure of its estate. The invasion of the omicron variant on these shores raises the spectre of fresh lockdowns in the weeks and months ahead, too.

It’s high risk, therefore, but I also think this almost penny stock could ultimately prove high reward. So it’s my opinion that the recent share price weakness could provide an attractive dip buying opportunity for my portfolio. The popularity of bingo in Britain has boomed in recent times and is expected to continue growing. This bodes well for Rank, which operates Mecca bingo halls along with the brand’s online portal.

I also like Rank’s exposure to the fast-growing online casino market under its Grosvenor masthead. Net gaming revenues here ballooned 12% during the three months to September.

Market day

Property listings specialist OnTheMarket (LSE: OTMP) trades barely above the penny stock limit, at 102p per share. It has ducked back towards its former territory as concerns over omicron have risen. Signs that home sales are falling sharply hasn’t exactly helped confidence in the company, either. Home sales dropped by more than half between September and October, according to HMRC.

The possibility that housing demand will continue to sink in 2022 due to economic uncertainty and the reinstatement of full-fat stamp duty is possible. It’s my opinion, however, that homebuyer interest — and consequently traffic at OnTheMarket — will remain strong as low interest rates and intense competition among lenders will remain in play. Significant government help for first-time buyers should also keep business ticking along nicely.

OnTheMarket is looking to capitalise on this opportunity by improving its website and its brand over the next 12 months, too. Like Trifast and Rank, I think this cheap UK share could help me make a lot of money.

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Rupert Hargreaves: Trifast

Trifast (LSE: TRI) specialises in the design and manufacture of high-quality industrial fastenings. After a slowdown in demand last year, sales have rebounded this year. Revenues in the first half increased 30% compared to 2020 and are now ahead of 2019 levels.

As the global economy continues to rebuild after the pandemic, I think this trend could continue. Management is also looking to complement organic growth with acquisitions.

At the beginning of September, Trifast acquired Falcon in the USA, and management has said that the search for additional acquisitions continues “apace.”

Considering the growth potential, I would buy the stock for my portfolio. Some challenges it could face that may hold back growth include cost and wage inflation pressures.

Rupert Hargreaves does not own shares in Trifast.

Christopher Ruane: Card Factory

As people buy Christmas cards, small-cap stock Card Factory (LSE: CARD) is on my radar. It’s 56% higher than a year ago, but well below its Spring highs.

The company sharply cut its loss in the first half. The Christmas season should be busy. Increasing moves online could help grow sales. The company is cash generative and cut net debt by a third in the first half. But Card Factory remains risky. Its shops can see sales plummet if there are lockdowns, and supply chain inflation could hurt profits.

Christopher Ruane does not own shares in Card Factory.

Roland Head: Spectra Systems

I think that security technology specialist Spectra Systems (LSE: SPSY) could be a quality company at a reasonable price.

Spectra specialises in providing authentication technology for documents, consumer goods and currency. For example, Spectra provides the security features for many countries’ banknotes and the equipment needed to test them.

Banknotes are Spectra’s biggest market, and this is probably the main risk for investors. Use of paper money is falling and the business could struggle to grow.

However, Spectra is diversifying and continues to win new contracts. The group also upgraded its profit guidance for 2021 in October. I think the shares look reasonably priced at current levels. There’s also a tempting 4.7% dividend yield. This is a stock I’d buy today.

Roland Head does not own shares in Spectra Systems.

Andy Ross: finnCap  

Financial company finnCap (LSE: FCAP) is a great small-cap stock in my opinion. Apart from its small market capitalisation, which gives it plenty of headroom to grow into a much larger company, I really like finnCap’s financials. They indicate to me a stock that has serious growth potential. 

The group has a three-year compound annual growth rate (CAGR) for sales of 29%. This is important because, as an investor, I want to know that demand for a company’s products/services is continuously increasing. The operating margin is improving, so all in all it seems like potentially a great time to buy the shares.  

Andy Ross does not own shares in finnCap.

Royston Wild: Science in Sport 

I’d use recent price weakness at Science in Sport (LSE: SIS) as a dip-buying opportunity. The sports nutrition giant has fallen 10% in value over the past month. Demand for the products it makes is rocketing as peoples’ desire to live healthier lifestyles grows and fitness activities become more popular. Science in Sport’s revenues jumped 24% during the six months to June. 

This small cap’s more than doubled in value during the last year. If industry analysts are to be believed there should be plenty of opportunity for Science in Sport’s share price to continue soaring too. Experts at Statista for example think the global sports nutrition market will be worth $35.4bn by 2026. That’s up significantly from the $16.5bn it was valued at last year. Through its popular products I think the business should make big profits in this favourable landscape.  

Royston Wild does not own shares in Science in Sport.

Zaven Boyrazian: iomart

iomart (LSE:lOM) is a cloud-computing business trying to take on industry giants like Amazon, Alphabet, and Microsoft. That’s quite a tough bunch of competitors, so it’s not surprising to see revenue growth struggle. However, management has since begun pursuing a niche in the hybrid-cloud market through bolt-on acquisitions.

It will take some time before this new strategy starts yielding results. However, iomart continues to be supported by fairly impressive cashflows courtesy of its high customer retention and 93% recurring revenue.

There is obviously no guarantee of success. And using an acquisitive approach has led to an increased debt position that adds more risk. But given the potentially explosive returns of becoming a new leader in cloud computing, I think the risk is worth the reward.

Zaven Boyrazian does not own shares in iomart, Amazon, Alphabet or Microsoft.

Paul Summers: Bioventix

Although still far from being cheap, I think shares in biotech firm Bioventix (LSE: BVXP) are starting to look attractive. Stock in the small-cap antibodies supplier has fallen 20% in value in 2021 so far. 

At least some of this selling pressure has been due to hospitals continuing to prioritise dealing with the pandemic over diagnosing people for other things. To make matters worse, understandably cautious patients aren’t even reporting symptoms to healthcare professionals. As a result, Bioventix’s main business has been suffering.

I reckon this might be a great contrarian opportunity. BVXP’s returns on capital and margins are some of the best on the market. The balance sheet also looks sound. Any indication that Covid-19 is being beaten back and the shares could rally. 

Paul Summers has no position in Bioventix

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