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3 small-cap shares that could become huge bargains this week

Credit: StephenMitchell

The US Presidential election will continue to dominate the news headlines for most of this week and investors can rest assured that markets will pay very close attention to the final result.

A Trump victory would clearly be bad news for the share market in the short term, although I believe a savage sell-off from current levels would present a fairly exciting opportunity for longer term investors to buy shares at a discounted price.

With that in mind, here are three small-cap shares that I’m keeping a close eye on this week:

BWX Ltd (ASX: BWX)

BWX shares have already fallen 22% since mid-October, but the shares could fall even further this week if investors get nervous. This isn’t because the company is likely to sell fewer units of its natural skincare products as a result of a Trump victory, but because the shares trade on a significant valuation premium to the broader market. However, this premium is largely deserved in my opinion, as BWX enjoys a particularly strong market position in Australia and it is also beginning to tap into a number of lucrative overseas markets.

Sealink Travel Group Ltd (ASX: SLK)

SeaLink is another share that has taken a pretty big fall recently and now trades on a fairly attractive forward price-to-earnings ratio (P/E) of around 16. The travel company delivered an extremely strong result last year, and although this growth is expected to moderate over the next few years, the company is still in a strong position to benefit from the tourism boom sweeping parts of Australia. Importantly, the platform for FY17 has already been set with the new year starting off better-than-expected and ahead of last year.

Servcorp Limited (ASX: SRV)

Servcorp is a provider of managed office spaces with operations in 53 cities across 22 countries.  As highlighted by the charts below, the company has been an impressive performer over the past five years with profit before tax increasing 167% during that time.

Source: Company Presentation

Source: Company Presentation

Importantly, Servcorp plans to increase floor capacity by 7% over the course of FY17 and this is expected to help boost earnings by around 15%. Despite this, the shares wouldn’t be considered a huge buy right now, although I believe a fall towards $7 per share would provide an attractive buying opportunity.

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Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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