Shares in specialist technology and engineering company TP Group (LSE: TPG) have risen by over 10% today, after the company continues to enjoy improved investor sentiment following its recent trading update.

With the company reporting just last week that it continued to make good progress in the final quarter of 2015, it now expects results for the full-year to be ahead of expectations. In fact, it anticipates achieving a key target for the year through being breakeven at the adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) level, which would be encouraging progress for the business.

TP Group’s share price is also benefitting from news that two of its directors yesterday purchased around 500,000 shares in the company between them. And with TP Group stating in its results that it has a strong pipeline of opportunities, providing good visibility for the business this year, investor sentiment could continue to pick up following the 30% rise in its share price in the year-to-date.

Clearly, TP Group is a small company and is therefore relatively high risk. However, it could be worth a closer look for less risk-averse investors.

Financially sound

Also rising by over 10% today is Victoria Oil & Gas (LSE: VOG). Like TP Group, it recently reported an upbeat set of results, with the Africa-focused company delivering a 73% increase in production in the final quarter of the year versus the comparable quarter of the previous year. Furthermore, Victoria Oil & Gas continues to be relatively unaffected by the slide in the oil price, reporting that it has had a minimal impact on its Gaz du Cameroun business in terms of gas price changes or customers changing back to oil.

In addition, the company reported that it has been able to maintain customers at their contracted prices and with a net cash position of $5.9m, it could prove to be relatively financially sound during a tough period for the wider industry. However, although the stock may be of interest to less risk-averse investors, with a number of other oil and gas plays being priced to sell, there may be more enticing companies to buy elsewhere within the sector.

Exceptionally volatile

Meanwhile, shares in investment company Concha (LSE: CHA) have risen by around 13% today, despite there being no news flow released in recent days. Of course, the last few weeks have been exceptionally volatile for the company’s share price, with it having fallen by 24% since the turn of the year. In fact, investor sentiment has been weak since the release of the company’s annual accounts which showed that Concha had made a loss of £628,000 for the year.

With Concha seeking new investment opportunities, it could successfully position itself for long term growth. But realistically, with only one investment at the present time, there appear to be better options available.

The post Are TP Group PLC, Victoria Oil & Gas plc And Concha PLC’s 10%+ Rises Set To Continue? appeared first on The Twelfth Magpie.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Indeed, only a year or so ago, Circle seemed to have a bright future with a market cap in excess of £100m and a cash-rich balance sheet. But the plunging price of oil and an expensive exploration programme have taken their toll on Circle’s balance sheet.

At the end of September, the company reported that during the first-half its net debt pile had ballooned to $64m, and sales had fallen 50% year-on-year.

Circle’s market cap has slumped to £16.6m at time of writing, or around $25m. So Circle’s net debt now exceeds the company’s market value by two-and-a-half times. As a result, it could be wise to avoid Circle for the time being. 

Continued sell-off

It’s also shaping up to be another bad day for Concha (LSE: CHA). Shares in the company have fallen 16% on the day at time of writing, adding to last week’s declines. Over the last three business days, Concha’s shares have lost 65% of their value, although there’s been little in the way of news to explain the decline. 

Concha’s shares slumped 52% last Thursday, which prompted the company’s management to issue a statement saying that the group was “not aware” of any press speculation that may have contributed to the recent volatility in its share price.

The company’s last market update was back in September when management revealed that the investment company was evaluating a “specific global opportunity within its investment scope.” Last week Concha’s management confirmed that “discussions are continuing” although “there can be no guarantee that this investment will be successfully completed.” It seems as if the market has taken this statement badly.

Unfortunately, there could be further declines to come as, Concha’s book value is only around 0.35p based on year-end 2014 figures. Unless the company makes a high profile investment soon, its shares could fall back to the 0.35p support level. 

Profit warning 

Shares in Audioboom (LSE: BOOM) are also under pressure today after the company reported its full-year results for the year to November. They fell significantly short of market expectations. What’s more, the company doesn’t expect to become cash flow positive until 2017 implying that two more years of uncertainty and fund raisings could be ahead for the group. 

According to today’s year-end trading update, Audioboom’s real revenue growth only began towards the end of its fourth quarter, with revenue in the period more than double the previous three quarters combined. And the company expects this trend to continue into Q1 of the next year. As a result, management expects the shift in timing and pace of adoption will hit its expected full year revenues for 2016. 

All in all, this was a pretty dismal trading update from Audioboom and it was, in many ways, a multi-year profit warning. 

The post Today’s Small-Cap Disasters: Concha PLC, Circle Oil plc And Audioboom Group PLC appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

This values ISG at £70.8m and with Cathexis already owning just under 30% of the business, it hopes the offer will provide ISG’s shareholders with a degree of certainty following a difficult period for the business. This included a pre-tax loss of £12.9m last year. And with the nature of ISG’s business being relatively uncertain and prone to extraordinary losses from time to time, selling out could be viewed as a positive move by risk-averse investors.

Bargain price?

But looking ahead to the current year, ISG is expected to move back into profitability with a pre-tax profit of £15.7m being forecast. This puts it on a forward price-to-earnings (P/E) ratio of just 6 using the offer price, which indicates that it may be valuing the company rather modestly. Further evidence of this can be seen in the company’s forward yield of 6.2%, which not only indicates impressive income prospects, but also a relatively appealing valuation.

Certainly, there are risks to the business and its share price performance has been hugely disappointing in recent months. In fact, it has fallen by 34% in the last month alone – even when today’s gain is taken into account. However, even factoring in the risks, the current margin of safety appears to be rather wide. As such, if the deal goes through then Cathexis may be picking itself up something of a bargain for the long term.

Hard to predict

Meanwhile, shares in investment company Concha (LSE: CHA) have been volatile this week, with them being down 43% since Monday but trading as much as 14% up at one point. The share price movement has been sufficiently volatile to prompt the company to release a statement in which it said it’s unaware of any press speculation that may have contributed to the recent volatility.

Concha also said it’s constantly reviewing multiple potential acquisition opportunities and that, as highlighted in its September update, discussions are still ongoing regarding a specific global opportunity within its investment scope.

Yes, Concha may have long term potential. But the fact that its shares have been so volatile of late and the company being a lossmaking entity, it seems that there may be better opportunities elsewhere within the small-cap space.  That’s especially the case since there can be no guarantee that its aforementioned discussions will lead to an acquisition, thereby making the company’s future appear rather difficult to accurately forecast at the present time.

The post What Is Going On At ISG PLC And Concha PLC? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Oily on a slippery slope

Oil explorer and producer Gulf Keystone owns valuable assets in the Kurdistan Region of Iraq. However, just because a company owns valuable assets doesn’t mean it can’t go bust — witness the fate of oil company Afren earlier this year.

Like Afren, Gulf Keystone is faced with a low-oil-price environment and is loaded with debt. Gulf Keystone also faces considerable uncertainty regarding the quantum and timing of payments from the Kurdistan Regional Government.

The company announced some good news on the latter front on 15 September: a $15m gross ($12m net) payment from the regional government for crude exports, which it anticipated would be the beginning of regular payments. On 15 October, Gulf Keystone announced receipt of another $15m gross ($12m net). However, 15 November has come and gone with no announcement of a payment.

At 23 October, following a half-yearly $26.4m interest payment to bondholders, Gulf Keystone had cash of $48.4m. The company is obliged to maintain a reserve account above $32.5m to avoid breaking a key debt covenant. Production and administrative costs were $49.1m ($8.2m a month) during the first half of the year, so Gulf Keystone is at risk of breaking the covenant by the end of the year in the absence of cash coming in.

Even if the Kurds make good on the $12m a month payments, with costs at $8.2m a month, Gulf Keystone would see a net increase in cash of $22.8m by next April — at which point the next half-yearly $26.4m interest payment to bondholders falls due.

Gulf Keystone’s bonds are trading at a huge discount to par, which tends to be a good barometer for the risk of equity dilution or wipeout. I believe the risk of an Afren-style debt spiral, putting power in the hands of bondholders, is far higher than many rosy-spectacled equity investors realise. As such, I’m avoiding Gulf Keystone.

Rumpelstiltskin required

Concha is an AIM-listed company, created just over a year ago to invest in “potentially disruptive global opportunities in the rapidly changing online social media space”.

The company has yet to make an investment, so its principal asset is cash. At the last balance sheet date (31 December 2014) cash stood at £5.741m. Since then, an exercise of warrants has raised a further £0.565m, and a settlement relating to a dispute from a previous incarnation of the company has been received; quantum undisclosed, but the dispute concerned a £0.467m loan.

So, maximum cash in the coffers would be £6.773m. Let’s work with that figure, even though the dispute settlement is probably less than the original loan and there’s been almost a year of plc, administration and due diligence costs on potential investments.

At a current share price of 5p, Concha is valued at £77.6m — a whopping eleven-and-a-half times the generously-calculated £6.773m cash. Frankly, the valuation appears ludicrous.

Back in March, Concha said it was in discussions “regarding a specific global opportunity, [which] … if pursued to a successful conclusion, the Board believes will lead to a transformation of the Company. At present, there can be no guarantee that this investment will be successfully completed …”

In June, Concha updated that “discussions are on-going” and in September that “progress has been made”, though the proviso remains that “there can be no guarantee that this investment will be successfully completed”.

Unless the deal being discussed involves Rumpelstiltskin spinning straw into gold, I can’t for the life of me see how Concha’s current valuation is in any way justified.

The post Why I’m Avoiding Gulf Keystone Petroleum Limited & Concha PLC For 2016 appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.