There are very few businesses on the ASX that are very chocolate related. This isn't going to be an article recommending Yowie Group Ltd (ASX: YOW) either. So how can I make this article about Easter eggs?
'Easter egg' can also mean a hidden message or secret in games and media. So, I'm going to write about two little-known small cap shares of the stock market. Here they are:
Paragon Care Ltd (ASX: PGC)
Paragon is a small cap healthcare business that provides medical equipment and various other health items for other healthcare businesses like hospitals and aged care facilities.
It may not sound exciting, but the business is steadily growing. It can charge more for the products it's selling over time, it will sell more products in the future because Australia's elderly population is growing and it's acquiring other healthcare supplier companies to boost its offering. For example, it recently announced it would be acquiring a surgical equipment business.
Another thing that I like about Paragon is that it is steadily increasing its dividend. It has increased its dividend each year since 2013 and currently has a grossed-up dividend yield of 5.99%.
Paragon is currently trading at 13x FY19's estimated earnings.
MNF Group Ltd (ASX: MNF)
MNF is Australia's largest Voice over Internet Protocol provider. Businesses are always looking to provider a better or cheaper service and that's what MNF can offer.
MNF is growing at an impressive rate. In its half-year result for the six months to 31 December 2017 it revealed revenue growth of 28%, earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 19%, net profit after tax (NPAT) growth of 25% and earnings per share (EPS) growth of 16%.
Management also increased the dividend by 15%, which is a good bonus for shareholders.
The market seems to have soured over MNF because it plans to relaunch its Pennytel brand. It will target the over-50 demographic and will use the current MNF software ecosystem. Management believe it will be EBITDA positive in FY19 and contribute $7.9 million EBITDA in FY20.
MNF is currently trading at 32x management's FY18 EPS guidance.
Foolish takeaway
I think both stocks are trading at good long-term value and will make sweet additions to an investor's portfolio for the next few years.
