Looking for companies that are an opportunity right now? Here are 3 of my favourite picks, with attractive prices and good prospects:
CBL CORP FPO NZX (ASX: CBL)
NZ-based CBL Corp is a specialty insurer with a combined ratio (a measure of profitability) of below 80%, which compares very favourably with many of the majors like Insurance Australia Group Ltd (ASX: IAG). CBL also recently reported Gross Written Premium growth of 25%, which is again very high for the industry, and likely unsustainable.
Yet even with lower growth, CBL has around 40% of its market capitalisation in cash, highly aligned and experienced management, and growth opportunities in both existing and new countries. Priced at 26 times statutory profit, or 17 times underlying profit, CBL appears attractively priced despite currency headwinds that hammered its profitability last year.
Nearmap Ltd (ASX: NEA)
Despite a recent, surprise capital raising that shocked shareholders and sent shares plunging, Nearmap continues to look like an attractive investment opportunity. The company has no debt and plenty of cash, and operates a growing business with very high profit margins.
According to management's estimates, Nearmap has around 15% of the Australian market and less than 1% of the much larger US market, showing there is plenty of room left to grow both here and overseas. I first bought shares in Nearmap at $0.56 almost two years ago, and the company has made significant progress since then.
Sirtex Medical Limited (ASX: SRX)
I was majorly wrong on pricing when I bought Sirtex at $29 in March last year. However, I remain confident in the company's prospects and think that at today's prices, investors are getting a much greater margin of safety.
Importantly, there is significant blue-sky upside if any of the numerous clinical trials underway like SARAH show a significant positive result. These could allow for Sirtex to sell more doses for a wider variety of conditions. The downside appears limited by steady demand for the company's SIRT product, as well as a wide range of clinical literature underpinning its efficacy. Sirtex also enjoys a strong balance sheet with net cash and no debt.
