Which are top 5 NZX small-cap stocks of 2021?

Highlights

• Small caps are for the investors who want to produce higher returns from their investments.
• However, investors must also have high-risk tolerance to consider investing in small-cap stocks.
• Rakon, Michael Hill and Skellerup were amongst the top small-cap stocks in 2021.

Small-cap stocks are stocks of companies with small capitalisation that are traded publicly.

Investors aiming for high returns usually take this option. However, they need to be risk tolerant and must put up with market risks for considering this option.

Let’s have a look at the top 5 small-cap stocks of this year.

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Rakon Limited (NZX:RAK)

Advanced frequency control and timing solutions provider, Rakon reported an underlying EBITDA and revenue growth of 132% and 43%, respectively, for the half year ended 30 September 2021.

The Group benefitted from increased global demand for its solutions despite facing COVID-19 disruptions in the supply chain. RAK has projected EBITDA to be between NZ$44 million and NZ$49 million for the year ended March 2022.

RAK ended the day 2.56% in green to close at $2.

Michael Hill International Limited (ASX:MHJ) (NZX:MHJ) 

Jewellery retailer Michael Hill provided a business update on Wednesday. The Group opened all its stores globally for the Christmas trading period after successfully steering through the shutdown in the July-November period across Australia and NZ. 

DO READ: Rakon (NZX:RAK) reports revenue growth in 1H22 results

MHJ delivered both sales growth and sustained margin expansion throughout November and December despite the spread of the Delta and Omicron variants. MHJ expects to deliver an EBIT of more than H1 FY21 results of $44.6 million in the first half of FY22.

MHJ ended the day 11.38% in green to close at $1.37.

Skellerup Holdings Limited (NZX:SKL) 

A designer, manufacturer and distributor of vacuum systems and polymer products, Skellerup Holdings, reported robust earnings in FY21. The Group posted a 38% increase in NPAT and a 22% rise in operating cashflow to $40.2 million and $58.8 million, respectively.

RELATED READ: Do these 2 NZX small caps have potential to outperform large-cap stocks?

The Group expects to deliver an NPAT of over 10% above the pcp for H1 FY22.

SKL ended the day 0.16% in green to close at $6.21.

The New Zealand Refining Company Limited (NZX: NZR)

New Zealand’s only oil refinery, NZR, reported RAP throughputs of 1.6 Mbbls in September /October 2021, 37% lower than the same period last year because of Auckland’s Level 4 and Level 3 lockdowns.

The Group also raised nearly $48.5 million in new equity, which comprises $39 million placement of new shares undertaken last month, to finance private storage services and those under negotiation.

NZR ended the day 1.11% in green to close at $0.91.

Sky Network Television Limited (NZX:SKT; ASX:SKT)

NZ’s broadcasting firm Sky Network sold its Mt Wellington campus for $56 million to Goodman Property Trust (GMT) in December.

ALSO READ: Sky Network (NZX:SKT): Why did it divest Mt Wellington assets?

The sale is expected to be fulfilled by mid-February next year. SKT expects its EBITDA to be between NZ$150 million-NZ$160 million from the earlier guidance of NZ$115 million-NZ$130 million.

SKT ended the day 0.75% in green to close at $2.7.

Bottom Line

Small-cap stocks are companies that are relatively young. Therefore, with the potential of the stock to grow more, there also comes significant risks of bad performance or its survival.

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