3 broker backed small caps

Foster Stockbroking has got their eye on these 3 speculative small caps.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Foster Stockbroking has got their eye on these 3 speculative small caps.

Find out why this broker thinks they should be on your watchlist, below.

Nearmap Ltd (ASX: NEA)

Geospatial map technology provider Nearmap Ltd has been gaining the attention of brokers for its strong share price rally and, more recently, its March quarter results.

Nearmap works with organisations of all sizes across the building, construction, architecture, engineering and government sectors, among others.

According to Foster, Nearmap is now a buy, after the broker placed a price target of $1.59 on the stock which is down 1% to 89c per share at the time of writing.

Foster believe large US enterprises will continue to drive sales and opportunity for Nearmap after the company reported its US annualised contract value (ACV) portfolio exceeded US$10 million – in line with Foster's estimate of US$10.2 million.

Nearmap said its March quarter growth was primarily driven by large enterprise customers as the company has made significant inroads in the US aerial imagery market with a growth acceleration strategy in the market bolstered by the appointment of a dedicated US enterprise customers general manager.

The Fosters broker maintains confidence in Nearmap's product offerings and labels the company as having "strong growth prospects" with diverse geographies now facilitating growth in subscriptions globally.

LiveHire Ltd (ASX: LVH)

Cloud-based online human resources productivity platform company LiveHire Ltd may only be a $123.5 million market cap company at present, but it's gaining the attention of many of late.

LiveHire operates in the HR technology industry, focusing on the sourcing and recruitment of candidates, and according to Foster Stockbroking, the stock should be on hold.

Foster listed concerns the March quarter results out of LiveHire missed expectations, with key negatives including a decline in cash receipts from the previous quarter, the slowdown of talent community connections and the loss of a key customer.

All of these things led to a downgrade from Fosters, who despite maintaining their hold rating on the stock, reduced NPAT forecast for FY18 and FY19 and cut its share price valuation from $1.17 to 70c per share.

LiveHire shares were up 2.9% to 71c per share at the time of writing.

Poor quarterly results caused Fosters to reset its expectations for LiveHire, and while product attractiveness remains, Fosters envisage a "slower ramp up" to achieve critical scale and profitability than first thought.

LiveHire was placed in a company-requested trading halt on May 1 pending the release of information regarding a 6-month integration with the Apply with SEEK product provided by SEEK Limited (ASX: SEK) as Seek did not approve of the announcement release at the time.

Terracom Ltd (ASX: TER)

Small cap mining company Terracom Ltd have been flagged by Foster Stockbroking as a buy after the company released promising third quarter results this month.

Terracom is a $103 million market cap company with a portfolio of projects in the coal bearing regions of Mongolia, Central Asia and Australia.

Fosters believe fourth quarter results out of Terracom will be even more promising, with its Blair Athol project the highlight of its third quarter with plans to ramp up activity at Blair Athol likely boding well for the miner.

Fosters have upgraded its forecast on FY19 NPAT for Terracom on the back of higher coal prices with a valuation of 58c per share on the stock which was priced at 27c per share at the time of writing.

Terracom still have a way to go before they can assert themselves as a key player in the commodity sector, and while Fosters risk profile on the company is high, its buy rating is telling in terms of its overall confidence in the company.

Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. The Motley Fool Australia has recommended SEEK Limited. 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 Scott Phillips.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »