Whenever we talk about small-cap stocks, first thing that comes to our mind is that they are relatively risker than mid-cap and large-cap stocks. However, at the same time, small-cap stocks also enable investors to make quick addition to their wealth, as they have the potential to register strong price increases, from more than 100% to even sometimes over 1000%.
Small-cap stocks are of those companies that have their market cap ranging from $300 million to nearly $2 billion. There are several factors that investors should consider while opting to inject funds in small-cap stocks such as risk associated and growth potential.
With this backdrop, let us discuss five ASX-listed small-cap stocks that have released significant market updates.
IODM Limited (ASX:IOD)
IODM Limited (ASX:IOD) is involved in the provisioning of cloud-based SaaS automated debtor management solutions.
25% Growth in March Receipts - The leading Australian accounts receivable and operational efficiency solution provider at the end of April 2020 notified the market with its performance for three months ended 31st March 2020.
- Receipts went up by 25% over the prior quarter and registered a rise of 43% when compared with the same period a year ago.
- IOD experienced higher than normal unaudited revenue results from domestic sales during the March quarter and particularly in the month of March 2020.
- In order to drive growth, the company is continuing to focus on finalising the final Western Union overseas agreements. This includes incorporating overseas subsidiaries where necessary.
At the end of February 2020, the company had a total of around $1.26 million in liquid assets.
On 8th May 2020 at AEST 01:22 PM, the stock of IOD was trading at $0.120 per share. The market capitalisation of IODM stood at $66.32 million with ~552.64 million shares outstanding. The stock of IOD has provided shareholders with returns of 50% and -29.41% within the time span of one month and three months, respectively.
Star Combo Pharma Limited (ASX: S66)
Dietary supplement products manufacturer, Star Combo Pharma Limited (ASX: S66) inked a Share Subscription Agreement with China-based company Goldenmax International Technology Ltd during March 2020. The agreement involves the issue of 49Mn S66 shares to Goldenmax or its nominee, resulting in $33.3Mn (before transaction costs). The fundraising is anticipated to be wrapped up by 30th May 2020.
S66 is likely to direct the proceeds towards significantly boosting its OEM manufacturing operations in Australia.
The shareholding structure, if the accord is successfully completed, would be as in the image below-
During 1H FY20, the company commenced the development, acquisition and installation of a Milk Formula Powder Plant at the premises in Smithfield. For the purchase and installation of these additional manufacturing facilities, S66 secured a $2.0 million equipment finance loan from CBA.
The stock of S66 last traded at $0.440 per share on 8th May 2020, with a market capitalisation of $38.08 million and approximately 86.54 million outstanding shares. The stock of S66 has provided shareholders with returns of 11.39% in the last one-month period.
Mosaic Brands Limited (ASX: MOZ)
Mosaic Brands Limited (ASX: MOZ) is involved in the retailing of apparel and accessories of women. The company, in a market update on 7th May 2020, made a significant announcement, highlighting its preparations to re-open retail fashion stores over the next upcoming months, starting from 11th May 2020, given the trial openings over the past week. The stores were temporarily closed as a precautionary measure in response to COVID-19.
The company added that these trial openings enabled MOZ to gain valuable insights into changes in customer shopping habits, store revenues and centre foot-traffic.
For FY20, the company anticipates EBITDA loss and forecasts loss for 2H FY20 to surpass 1H FY20 EBITDA of $32.7 million, primarily due to decline in foot traffic through March 2020 because of the impact of COVID-19. The management of MOZ expects impact of COVID-19 for a short-term period while anticipating returning to profit in FY21.
On 8th May 2020 (AEST 01:50 PM), the stock of MOZ was trading at $0.725 per share, indicating a rise of 4.317% against its previous closing price. The market capitalisation of MOZ stood at $67.28 million with an annual dividend yield of 20.86%.
Mako Gold Limited (ASX: MKG)
Mako Gold Limited (ASX: MKG) is a metals & mining sector player, which is engaged in the acquisition and exploration of gold tenements. During the March 2020 quarter, assay results received from diamond drilling program returned numerous high-grade gold intercepts including 7.7m at 11.65g/t Au, including 1m at 47.3g/t Au on the Tchaga Prospect, Napié Project, Côte d‘Ivoire. The company also signed a binding term sheet for sale of Niou Project in Burkina Faso to Nordgold for a consideration of US$700,000.
Response to COVID-19: MKG rolled out some changes to mitigate reduced activity levels, in addition to potential personal and financial risks associated with the COVID-19 pandemic. The measures included closure of offices in Australia and West Africa with employees working remotely. Salaries of senior management also reduced by 50%, with the remaining 50% deferred under the same terms as directors. All directors’ salaries and fees, including the Managing Director have been deferred, with deferred salaries to be reimbursed at a later date in either cash and/or shares.
During the trading session on 8th May 2020 (AEST 02:26 PM), the stock of MKG was trading at $0.055 per share, indicating a rise of 10% against its previous closing price. The market capitalisation of MAK stood at $5.08 million and the stock of MAK has provided shareholders with returns of 18.64% and -44.44% within the time span of one month and six months, respectively.
Cygnus Gold Limited (ASX: CY5)
Cygnus Gold Limited (ASX: CY5), engaged in gold and base metal deposit discovery in the south west Yilgarn of Western Australia, recently notified the market about anomalous gold results from aircore (AC) drilling program on the Lake Grace JV in partnership with Gold Road Resources Ltd.
The program confirmed at least eight discrete gold anomalous prospects.
Best results included
- LGAC0418: 6m @ 0.59g/t Au from 49m
- LGAC0429: 3m @ 0.20g/t Au from 25m
- Gunsmoke: LGAC0332: 12m @ 0.78 g/t Au from 30m, incl. 8m @ 1.06 g/t Au from 30m
- LGAC0138: 1m @ 0.16g/t Au from 39m (end of hole sample)
- LGAC0140: 3m @ 0.24g/t Au from surface and 2m @ 0.15g/t Au from 32m
During the quarter ended 31st March 2020, the company secured Panhandle exploration licence and closed the quarter with a cash balance of $1.5 million.
On 8th May 2020 (AEST 02:28 PM), the stock of CY5 was trading at $0.054 per share, trending downward by 1.818% from its previous closing price. The market capitalisation of Cygnus Gold stood at $3.75 million and the stock of CY5 has provided shareholders with returns of 34.15% and 57.14% within the time span of one month and six months, respectively.