Mind Gym

The spotlight on workers’ mental health — as well the impact of poor mental health on company productivity — has intensified in the post-Covid climate. It’s why I think Mind Gym (LSE:MIND) could experience brilliant earnings growth.

This behavioural science consultancy goes into companies to improve employee wellbeing and enhance leadership culture. It saw revenues rise 12% during the 12 months to March. And it is likely to keep stacking up business wins as burnout across the global workforce picks up.

A survey by business loan provider Money.co.uk illustrates the scale of the problem. It shows that almost half (47%) of employees said they had reduced their level of effort at work over the past one to two years.

Some 63% of UK workers embrace ‘Bare Minimum Monday’, the report adds. A similar percentage have said they also take it easy on Fridays to avoid burning themselves out.

I like Mind Gym because it has a strong balance sheet to help it continue innovating to win contracts with blue-chip companies. It had cash of £7.6m on its books as of March, levels that beat the firm’s prior expectations. It also has a £10m debt facility that remains undrawn.

I’m conscious that trading here could be turbulent in the near term. A tough macroeconomic environment could see companies scale back spending in areas like staff motivation.

But I believe this is baked into Mind Gym’s rock-bottom valuation. City analysts expect earnings here to rise 127% in financial 2024, leaving the penny stock trading on a forward price-to-earnings growth (PEG) ratio of 0.1.

A share is considered undervalued if it trades on a reading below 1.

Andrada Mining

Buying some lithium stocks is also attractive to me as electric vehicle (EV) sales explode. Andrada Mining (LSE:ATM) is one such company I think is a top buy right now.

Formerly known as known as AfriTin, the company owns the Uis lithium mine in Namibia, an asset it has described as “a globally significant lithium and tin resource”. Tin production has commenced here and rapid expansion is planned to supercharge output. Completion of a lithium pilot plant there is also scheduled for next month.

Andrada also owns the nearby Nai-Nais mine, a project that the company announced this week has just produced maiden lithium concentrate. Chief executive Anthony Viljoen said that the milestone “moves us one step closer to full-scale lithium production”.

Lithium demand is tipped to take off as EV sales steadily rise. The International Energy Agency thinks global sales of these low-carbon vessels will hit 14m in 2023, up 35% from last year’s levels. Andrada could be one of the best UK shares to capitalise on future growth.

Of course the firm’s earnings could disappoint if it encounters mine development problems. But on balance I believe its portfolio of outstanding metal projects still make it a top penny stock to buy.

The post 2 penny stocks I think are screaming buys! appeared first on The Twelfth Magpie.

Yet if I buy a penny stock that starts to attract attention and outperforms, I can benefit from a rapid share price move higher. Here are two I think could hit 100p later this year.

Help at hand

Mind Gym (LSE:MIND) is a “human capital and business improvement specialist”. This sounds a bit woolly to me! In normal terms, it goes into a business and helps to improve efficiency by making workers feel valued. The company benefits from more productive staff, and the staff feel more important.

I feel this niche area could do really well this year and beyond. Businesses are becoming more and more conscious of retaining staff, especially those working from home. There’s also a lot of pressure to show that management do care about workers. By hiring Mind Gym, it helps to tick the box.

It already boasts about FTSE 100 companies it works with, ones that have big budgets.

The current share price is 80p, so I’d need to see a 25% uplift this year to hit 100p. Given that the stock is down 44% over the past year, it was trading at 100p last September. It’s not an unrealistic level to bounce back to, if finances continue to improve post-pandemic.

The pandemic is one reason why the stock is at depressed levels, as the business had to pivot to delivering sessions online. From looking at how the transition went, I don’t feel it was a great move. A risk going forward is that we see less in-person demand for Mind Gym if more companies transition to working from home.

A lithium hotshot

The second penny stock on my radar is CleanTech Lithium (LSE:CTL). Energy stocks related to lithium continue to be popular, and this is an example of an extraction supplier at the beginning of the production chain.

CleanTech says it “holds hold licences rights over three substantial lithium projects, located in the lithium triangle, the world’s centre for battery grade lithium production”.

As a result, there’s significant upside potential for the share price this year if we get some encouraging project updates on the commercial prospects. The current share price of 72p reflects a 97% jump since the IPO last March. On that trajectory, 100p is a very viable target price later this year.

The big risk I see here is that the share price could be inflated on speculation. The business has zero income. Combined with administrative costs, the last half-year report showed a loss of £1.4m. Granted, the firm isn’t going out of business tomorrow, but it does need to start getting revenue through the door soon before investors get concerned.

I think both penny stocks have solid potential. Due to the higher risk, I’m looking to allocate a small amount of money to each company.

The post 2 penny stocks that could hit 100p before year end appeared first on The Twelfth Magpie.

Therefore, with some spare cash, I’d allocate a modest proportion of my stock market holdings to smaller firms with strong growth prospects.

One share that caught my eye recently is Mind Gym (LSE:MIND), a behavioural science consultancy that works with FTSE 100 and S&P 500 companies on business improvement and staff training. With a share price below 78p and a market cap of £77.5m, I think this penny stock could be a good buy for me today. Here’s why.

Buy the dip

The Mind Gym share price has performed poorly over the past year, slumping 46%. However, large falls can sometimes be attractive opportunities for me to scoop up stocks at cheap valuations. I think that’s the case with this penny share.

The company’s half-year 2023 results were largely positive. Total revenue grew 11% to £26.8m. The business showed particular strength in the US, where it makes the lion’s share of its income. Mind Gym’s gross profit margin also increased by 1.6% to hit 87.5%. However, EMEA revenue was a little disappointing, declining 2%.

Perhaps the biggest concern is the 62% reduction in the company’s cash in the bank. That figure is now £4.5m, whereas it was £12m at half-year 2022 stage. I’ll keep a close eye on this number to ensure the firm’s cash balance doesn’t become too great a risk from an investor’s viewpoint.

That said, Mind Gym’s debt position remains healthy. The group retains a £10m debt facility for flexibility, but this was undrawn as of 2 December 2022.

Overall, the sell-off of the company’s shares doesn’t look justified to me considering the broadly encouraging results. So I think this could be a dip-buying opportunity for me to open a position.

What’s next?

Looking ahead, there are reasons to be optimistic about future growth. The company recently secured its largest ever client framework agreement with a global energy business. Revenues from this deal are expected to exceed £10m over the next 24 months.

The business also maintained its full-year guidance despite macroeconomic headwinds. Plus, it continues to make progress in digital development with regard to its one-to-one online coaching platform, Performa. As a highly scalable offering, I’m keen to see how this impacts the company’s performance.

A possible US recession is a risk facing the group. Demand for the company’s services could fall in a tricky economic environment. On the other hand, if redundancies rise, I can see how employers would be keen to preserve a positive workplace culture and smooth business functioning. That’s exactly where Mind Gym can help.

Why I’d buy this stock

Retaining talent and creating a positive office dynamic are always going to be goals for major corporations. Provided Mind Gym can ensure its finances remain robust in what could be a challenging year, I think its future looks bright.

If I had some spare cash, I’d buy Mind Gym shares today.

The post 1 penny stock under 78p that I’d buy today appeared first on The Twelfth Magpie.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Mind Gym 

What it does: Mind Gym provides courses designed to boost workers’ happiness, productivity and leadership skills. 

By Royston Wild. Trading news coming out of Mind Gym (LSE:MIND) has been quite impressive in recent weeks. Yet the AIM-listed business continues to trade in and around penny stock territory. 

However, I think the small cap could be a great stock for investors to buy in early December. I believe the release of half-year results on Friday 2nd could remind the market of its excellent sales momentum and lift its share price higher. 

Mind Gym provides services that help employees improve their wellness and their productivity.  With mental health coming increasingly under the spotlight, demand in this niche market could be about to boom. 

City analysts think so, too. They reckon Mind Gym — boosted by its acceleration in the digital arena — will record earnings growth of 31% and 129% in the financial years to March 2023 and 2024 respectively. 

Turnover leapt 11% in the six months to September, the company announced a month ago. Despite the worsening economic backdrop, I’m expecting December’s update to paint another sunny picture.  

Royston Wild does not own shares in Mind Gym. 

Calnex Solutions

What it does: Calnex is a technology company that specialises in testing and measurement services for telecommunication networks.

By Edward Sheldon, CFA. Calnex Solutions (LSE:CLX) continues to generate strong growth on the back of the global 5G rollout. For the six months to 30 September, revenue was up 38% to £12.7m. Meanwhile, diluted earnings per share were up 34% to 2.67p.

Looking ahead, I see the potential for further growth. In its recent H1 results, the company said that investment in telecoms infrastructure to deliver next generation connectivity “continues at pace”. It also advised that it had a strong order book moving into H2.

One thing I like about Calnex, aside from the growth potential, is the fact that the company is founder led. Research shows that founder-led businesses often turn out to be good long-term investments. Founder and CEO Tommy Cook also owns a huge amount of company stock, meaning management’s interests are aligned with those of shareholders.  

There are some risks to consider here. Component shortages/supply chain issues are one. Overall, however, I see a lot of appeal in the stock right now.

Edward Sheldon owns shares in Calnex Solutions.

Fisher James & Sons

What it does: Fisher James & Sons is a company focused on providing support and engineering services to the marine industry.

By Gabriel McKeown. It used to be tricky to find high-quality companies with low market capitalisation; however, the recent market turmoil has meant that there are now far more small-cap opportunities for UK investors. A prime example of this is Fisher James & Sons (LSE: FSJ), as the share price has fallen almost 85% from pre-pandemic levels.

Despite this share-price decline, the company’s earnings are forecast to grow considerably, signalling a rebound may be on the horizon. Earnings per share is expected to grow by over 40%, compared to 3% turnover growth, indicating that profit margins should improve. Additionally, free cash generation remains strong and is now above its three-year average level.

The company’s significant debt level has likely caused investors to avoid this opportunity. However, the interest cover ratio of 2.1 indicates that this can be covered comfortably by earnings. This financial stability is certainly encouraging, especially if market conditions begin to weaken.

Gabriel McKeown does not own shares in Fisher James & Sons.

Judges Scientific

What it does: Judges Scientific acquires and improves specialist scientific equipment manufacturing businesses serving a diverse range of industries.

By Zaven Boyrazian. Judges Scientific (LSE:JDG) owns and operates a diverse portfolio of scientific equipment manufacturing businesses acquired over the last two decades. It’s certainly catering to a niche market. Yet, its products are critical to the research process for many industries and scientific institutions.

Over the last five years, annual revenue growth has been a modest 5%. However, with management improving operational efficiency as well as exercising pricing power, operating margins have rapidly expanded from 1.7% in 2017 to 17.5% at the end of 2021. That’s more than double the industry average.

Being a highly acquisitive business does introduce some notable risks. The balance sheet could become compromised if the group executes an expensive buyout that fails to live up to performance expectations. However, given Judges Scientific’s track record of successful acquisitions, I feel this is a risk worth taking.

Zaven Boyrazian does not own shares in Judges Scientific.

Shoe Zone

What it does: Shoe Zone is a low-cost footwear retailer that sells shoes in over 380 stores across the UK and through its website.

By Harshil Patel. Shoe Zone (LSE:SHOE) reported higher sales over the past year. Its low-cost offering is proving to be popular as customers tighten their belts and face rising costs elsewhere.

It’s a founder-led, well-run business that keeps a tight lid on costs. Much of its future growth could come by expanding its larger store format and from online sales. So far, this strategy seems to be working.

Its double-digit profit margin is stable versus last year, but a drop in shipping costs could push it even higher next year.

I also like its growing dividends and share buybacks. Shoe Zone currently offers a dividend yield of 3%. With £14m of cash on its balance sheet, I’m pleased to note that it’s well funded.

As a shoe retailer, there is competition. And growing stores in an uncertain economic climate could be a challenge over the coming years.

That said, overall, I’d say it’s a resilient, and cash-generative business. It’s making excellent progress and I’d buy the stock for my ISA this December.

Harshil Patel does not own shares in Shoe Zone.

Aquis Exchange 

What it does: a financial services firm operating through three divisions: Aquis Exchange, Aquis Stock Exchange, and Aquis Technologies. 

By G A Chester. Founded and led by a veteran stock exchange technology pioneer, Aquis Exchange (LSE: AQX), is an industry innovator and disruptor. 

Its core Aquis Exchange is a pan-European equities trading platform for institutional investors. It offers a ground-breaking subscription-based pricing model, rather than pay-per-trade. The company also owns Aquis Stock Exchange, a challenger to the London Stock Exchange‘s AIM market. Further revenues come from selling market data and licensing exchange software to third parties. 

Aquis has a current market value of £118m. Revenue for 2022 is expected to be close to £20m (+15%), with pre-tax profit at just over £4m (+25%). Thereafter, annual top-line growth is forecast to accelerate to nearer 20%, with pre-tax profit growth up into the mid-to-high 30s. 

I think the market’s being generous offering me the chance to buy Aquis stock at 21 times forecast 2023 pre-tax profit of £5.65m. Nevertheless, there’s a risk the shares could derate if growth were to undershoot the high level anticipated. 

G A Chester does not own shares in Aquis Exchange. 

Premier Miton Group

What it does: Premier Miton Group is a Surrey-based fund management company

By Paul Summers: Many listed fund managers have seen their share prices collapse as clients have become skittish over the global economy. AIM-listed Premier Miton (LSE: PREM) is no exception. Its value has fallen by more than half in 2022. 

Based on analyst projections, the stock can now be mine for 14 times earnings. That’s not exactly cheap. However, it could turn out to be a bargain when market sentiment inevitably shifts and forecasts are revised. Importantly, Premier has the track record to lure investors back, with 88% of its funds in the first or second quartile of their sectors since inception.

Then there’s the income stream. Although dividends can’t be guaranteed, Premier is down to yield 9.5% in this financial year.

I think this might be a great contrarian play. That said, I would consider waiting until after full-year results are announced early in December before potentially buying the stock.

Paul Summers has no position in Premier Miton Group

Frontier IP 

What it does: Frontier IP provides commercialisation and support services to very early-stage companies in exchange for founding equity stakes. 

By James J. McCombie: Frontier IP (LSE: FIPP) was able to claim its first IPO listing of a portfolio company in its 2022 annual report, which generated £6.5m of cash in share sales. A further £3.4m flowed in after it sold more of the same shares. The hope is that cash flows like this could become a regular occurrence as the 24 companies in Frontier’s portfolio continue developing. And there are some exciting companies in there. One is developing a new family of antibiotics, and another turns landfill fodder into high-quality tiles and tabletops.  

Frontier IP expends time and resources for equity stakes in companies that might have little more than an idea. Although the rewards can be great, many might return nothing, and now the lion’s share of operating income is non-cash. The portfolio approach reduces the risk of any one failure wiping out the company, but this is still a high-risk investment.   

James J. McCombie does not own shares in Frontier IP.

Hotel Chocolat

What it does. Hotel Chocolat is a premium British chocolate retailer. It produces and distributes chocolate and other cocoa-related products.

By John Choong. Shares in Hotel Chocolat (LSE: HOTC) have declined by an eye-watering 70% this year. Its recent exit from the US market hasn’t helped investor sentiment either, as management now expects its FY22 to be loss-making and slower growth pencilled in for FY23.

The good news, however, is that the bad news has already been priced in, and Hotel Chocolat stock may have bottomed. But more importantly, the company can capitalise on a catalyst as the UK enters a recession. The ‘lipstick effect’ — where more affluent customers downgrade purchases to more ‘affordable’ items such as chocolate — could present a boost to sales for the firm.

Having said that, I should point out that upside potential for the stock remains limited according to Berenberg, who rates the stock a ‘hold’ with a price target of £1.55. So, in the coming days, I’ll just be dipping my toes in, and may buy more stock when the retailer’s outlook improves.

John Choong has no position in Hotel Chocolat.

The post Best British small-cap stocks to buy for December appeared first on The Twelfth Magpie.

Good performance

I think this is an encouraging place for me to explore the merits of the almost-penny stock further. The company, with a market capitalisation of around £170m, is clearly not small. And its latest results show that it is recovering fast from the pandemic too. For the six months ending 30 September 2021, the company’s revenues grew by a massive 67% compared to the corresponding period in 2020. Also, after crashing into losses last year, it has now managed to break even.

I also like the fact that for the last year and a half, which is essentially through the pandemic, there has been only one period of six months when it reported losses. And that was in the first six months of lockdowns in 2020, between March and September. For the past year, it has clocked either a net profit or broken even. 

It is also positive about the future. As per CEO Octavius Black “…we have demonstrated our ability to grow revenues… Mind Gym remains well placed to adapt and prosper in the vast, growing and rapidly evolving corporate change, learning and wellness market”. 

Trading below pre-pandemic levels

Despite this, the stock is yet to go back to its pre-pandemic levels. In early 2020, it had touched a high of 204p, so right now it is still trading some 20% below that level. Considering it progress over this time, I think its share price could rise more.

How much it rises, of course, depends on the pace of recovery. The Omicron variant is still a bit of an unknown, and has sparked off some panic. Additionally, winters make us more vulnerable even with vaccinations. My point is that we should not take it for granted that the pandemic’s market impact might be over. The stock markets are highly reactive these days even to relatively small developments that could potentially portend some serious bad news. 

And Mind Gym is in a segment that could be particularly susceptible to a decline if there is another slowdown. When companies are struggling to make ends meet, professional skill development might be put on the back burner, important as it is, in my view. Besides that, financially, Mind Gym’s bounce back has been relatively strong compared to last year, but not so much compared to the year before, which was the last pre-pandemic year. 

Would I buy this almost-penny stock?

Keeping this in mind, I would like to wait a while before making a decision on whether to buy the stock or not. It is a good stock in my view, but I still think that it could face some challenges in the near future if the economy continues to stay weak. I will keep it on my watch list though, and focus on buying other cheap stocks right now.

The post This almost-penny stock just swung back into profits. Would I buy it? appeared first on The Twelfth Magpie.

Supply of all types of social housing has failed to keep up with demand over the past decade. And Home REIT is investing vast sums to soothe this shortfall. It raised £350m via a rights issue in September, almost half of which it has just spent to acquire 366 properties. The company’s acquisition pipeline is packed with other opportunities, which it’s ready to pull the trigger on, too.

Home REIT’s acquisition-led growth strategy leaves it open to a series of risks like huge unexpected costs and disappointing revenues growth. But there’s still plenty of reasons why I like this ESG share today.

A acquisition-led UK stock on my radar

Begbies Traynor (LSE: BEG) is also high on my shopping list today. This is because I think the number of corporate casualties could unfortunately be poised to soar as the British economy slows and the furlough financial support scheme ends. According to the Insolvency Service there were 1,446 insolvencies in England and Wales last month. That was an eye-watering 56% year-on-year increase.

I wouldn’t buy this UK share just because I expect profits to leap in the short-to-medium term. I think it could rate terrific shareholder returns over the next 10 years, as its acquisition-led growth strategy rolls on. Begbies Traynor operates in a highly regulated industry and future potential changes in the law could affect its profits.

Another chance to make big money!

I believe Mind Gym (LSE: MIND) could be another great company to buy for my portfolio for the next decade. This UK share has risen 133% in value over the past year alone. I expect it to keep soaring too as companies try to support workers’ mental health and improve their productivity following the Covid-19 crisis.

Mind Gym saw revenues jump 76% year-on-year in the six months to September. Sales were also up 7% compared to the same 2019 period. The business of behavioural science is booming and Mind Gym says that it’s worked with half of all FTSE 100 and S&P 100 companies. However, it’s not just the big hitters that are investing in their workforce’s wellbeing. A GlobalData survey shows that around one-third of UK small to medium-sized companies have increased their support for mental and physical wellbeing since the Covid-19 outbreak.

I also like Mind Gym’s decision to ramp up investment in its digital proposition. As a consequence, digital now accounts for more than 80% of group sales. Project overruns and disappointing returns could have a significant impact on predicted profits.

The post 3 UK stocks I’d buy to make BIG money in the next 10 years appeared first on The Twelfth Magpie.

According to my figures, including dividends, the stock has produced a total annual return of 25% since 2008, that’s 15% higher on average per annum than the FTSE 100 over the same period.

Both earnings and dividend growth have helped power the shares higher. Net profit has increased at an average annual rate of 29% since 2013, supporting dividend growth of 15% per annum over the same timescale.

Is the price worth it?

This performance has undoubtedly earned the company a position in the FTSE 100 Hall of Fame. And, unlike so many other stocks that have delivered market-smashing performance, the shares remain appropriately priced today.

City analysts have the company’s earnings per share (EPS) jumping 43% in fiscal 2019, giving a forward P/E of 10.9. However, there’s a degree of risk to these numbers, because the company’s ability to hit this earnings growth target depends on the success of its integration of Europac.

DS announced that it was acquiring its Spanish competitor earlier this year in a deal worth €1.9bn. The merger is expected to make a substantial contribution to the enlarged group’s bottom line. And management also believes it can draw out synergies of €50m by combining duplicate operations.

However, as is the case with all large integration projects, there’s a risk that the merger could destabilise DS, as management focuses on integration while neglecting the rest of the business. It seems that this is what the market’s concerned about. Without concrete numbers showing the benefits of the deal, I reckon investors will continue to view DS with a degree of scepticism.

That said, I’m also excited by DS’s current valuation, so I’m willing to give management of the benefit of the doubt here. Indeed, DS has a history of successfully integrating new businesses. There’s a good chance they will hit the mark this time around as well.

That’s why I am a happy buyer of the stock at current levels. I’m also interested in the prospects for newly-listed company Mind Gym (LSE: MIND).

Founder-led 

Mind Gym describes itself as a behavioural science business that uses products to deliver “human capital business improvement solutions.” According to its website, these solutions include programmes to help employees improve at work and support management training programmes.

The business has seen a substantial boost recently from the #MeToo movement, as clients have approached the company looking for help in improving their corporate culture. This spike in demand helped profits nearly double in the last financial period to £7.8m.

What I like about this business is that it’s still manager-owned. Even though the founders pocketed £24m when they took the business public, they still hold just under 65% of the stock, giving them a strong incentive to produce the best returns for shareholders.

So, even though it is still only early days for the company’s life as a public business, I’m cautiously optimistic on its outlook. I think it could be worth a dabble at current levels, ahead of half-year results to the end of September which are expected to be released on the 4th of December.

The post A FTSE 100 dividend growth stock I’d buy today alongside this top small-cap growth stock appeared first on The Twelfth Magpie.