The latest quarterly report for listed investment company (LIC) Contango Microcap Ltd (ASX: CTN) has just been released.
Investors who allocate a portion of their portfolio to micro and small capitalised stocks, in general, would find the Contango quarterly report a worthwhile read with a number of interesting stocks always discussed.
In overall terms, it's good to note that Contango believes the outlook for micro-cap industrial stocks is solid with low interest rates and a lower currency environment supporting earnings.
Here are 3 stocks highlighted by Contango that could be worth investigating further:
- Senex Energy Ltd (ASX: SXY) – the stock is down 40% this calendar year, presumably at least in part due to the collapse in the oil price. Contango is positive on the outlook for the group with the stock a new addition to the portfolio.
- Sandfire Resources NL (ASX: SFR) – a gold and copper producer which has been bucking the negative sentiment towards mining stocks to post gains of over 20% this calendar year. Like Senex, Sandfire is a new addition to the Contango portfolio with the fund manager highlighting strong cash flows as a key attribute for its positive outlook on the stock.
- Lovisa Holdings Ltd (ASX: LOV) – the newly listed jewellery retailer is in expansion mode with retail operations now spread across eight countries and 230 stores with more growth forecast to come.
Meanwhile, here are 2 stocks which perhaps are best avoided:
- Nanosonics Ltd. (ASX: NAN) – Contango decided to exit its portfolio position in this medical device stock citing excessive valuation.
- NIB Holdings Limited (ASX: NHF) – Like Nanosonics, Contango had nothing specifically against the business operations of NIB but rather was concerned that pricing had run too far ahead of valuation and hence sold out completely from this stock as well.
