Could these 5 NZX small-cap stocks be considered for long term?

Highlights

  • Small-cap stocks aim for profitability and have the ability to turn into large-cap firms.
  • They are stocks that are low priced and have a better growth rate.
  • However, small-cap stocks are prone to market risks and offer less liquidity to investors.

Small-cap stocks are low-priced stocks. These companies offer investors more scope for growth and more potential to earn money. However, they come with greater risk and volatility, especially when the market is going through a low phase.

Source: Copyright © 2021 Kalkine Media

Investors who want higher returns from their investments tend to go for small-cap stocks.

Let’s go through how these 5 small-cap stocks listed on the NZX are performing.

The New Zealand Refining Company Limited (NZX:NZR

NZR is the only oil refinery in NZ and has a market cap of $304 million. NZR shares have given a YTD return of 80%. On 10 September, NZR shares ended the trading session at $0.97, down 2.02%.

Refining NZ recently revealed that it had reached an agreement with Mobil Oil New Zealand Limited on key commercial terms. These terms include the price for a prospective import terminal operation at Marsden Point.

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The Company has reached an agreement with all 3 of its existing customers. It is also planning on finalising the discussion on Terminal Services Agreements and completing all planning on conversion. This comes ahead of a final investment decision likely to happen around September end.

Skellerup Holdings Limited (NZX:SKL)

Skellerup Holdings designs, manufactures and distributes vacuum systems and polymer products.

Skellerup Holdings’ shares have given a YTD return of 49.32% and have a market cap of $1 billion. SKL shares have given a YTD return of 80%. On 10 September, NZR shares ended the trading session at $5.44, down 0.18%.

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On 1 September, the Group announced that it had completed the earlier declared acquisition of the business and assets of Talbot Technologies. SKL posted a record NPAT of $40.2 million and an operating cash flow of $58.8 million, up 38% and 22% respectively, for FY21 compared to FY20.

Vista Group International Limited (NZX:VGL)

Vista offers technology solutions to the film industry and has a market cap of $544 million. VGL shares have given a YTD return of 43.45%. On 10 September, VGL shares ended the trading session at $2.38, down 1.24%.

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The Group reported strong first-half results for 2021 with good underlying recurring revenue growth. It also launched Vista Cloud on time and budget, subsequently expanding prospects for the Vista Group.

Turners Automotive Group Limited (NZX:TRA)

Turners Automotive is focused on providing automotive financial solutions and has a market cap of $387 million. TRA shares have given a YTD return of 41.8%. On 10 September, TRA shares ended the trading session at $4.5, up 2.04%.

On 9 September, TRA’s NZX-listed subordinated bond (TRA100) will be redeemed on its maturity date, 30 September 2021. The bonds will be repaid from available bank facilities leading to savings in interest cost in the future.

Serko Limited (NZX:SKO)

Serko is an NZ-based company specialising in travel and expense technology solutions and has a market cap of $830.8 million. SKO shares have given a YTD return of 34.72%. On 10 September, SKO shares ended the trading session at $7.69, down 1.41%.

Serko’s total revenue fell 37% to $16.9 million for the year ended 31 March 2021. The Group partnered with Booking.com and also completed a validation phase in North America with the Zeno brand.

The Group has also been working on new processes and also on carbon management options for all kinds of business travel.

Bottom Line

Small-cap stocks are low-priced stocks with high-growth potential. Investors must take into consideration their risk appetite before making any investment in the same.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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