The Motley Fool

3 small cap shares I like right now

In my opinion, these three small cap companies are worth keeping an eye on at present.

Alliance Aviation Services Ltd (ASX: AQZ)

Recent financial results came in better than expected for this small cap mining services company engaged in FIFO transportation services.

Alliance Aviation offer ad-hoc charter services as well as FIFO deals through five key airports in proximity to mining and energy sector hotspots across Australia.

Alliance reported profit before tax of $26.1 million for FY18 – up 33% from FY17 – as net debt was reduced by $18.3 million to $52.4 million and total revenue jumped 23% to $248 million.

The company increased its total flying hours by 35% over the period, also declaring a full-year fully-franked dividend of 8.8c per share up 193% on FY17.

Alliance is seeing increased activity in all business sectors at present and is focused on increasing revenue through tourism sector growth with its wet-lease flying offerings proving significant of late.

Continued growth is expected through FY19 with sustaining capital expenditure for the year expected to increase to between $23 million and $25 million as additional aircraft are added to Alliance’s fleet.

Jumbo Interactive Ltd (ASX: JIN)

Shares in internet lottery business Jumbo Interactive are at a 52-week high today, up 1.3% to $7.82.

Jumbo has been a standout ASX performer in the last year, with its share price jumping up from $2.78 at this time last year with almost half a million active customers to its name.

Jumbo’s revenue from continuing operations in FY18 was close to $40 million – up 23% from FY17 – with a net profit of $11.8 million – up a whopping 55% from FY17.

Jumbo was certainly successful in increasing its margins in FY18 with EBIT expected to continue to grow through FY19 by between 44% and 46%.

If you’re tired of more traditional gambling shares like Tabcorp Holdings Limited (ASX: TAH) or Aristocrat Leisure Limited (ASX: ALL), Jumbo might be one you’d like, as it’s underpinned by a pretty impressive grasp on technology.

Specialty Fashion Group Ltd. (ASX: SFH)

Small cap women’s apparel retailer Specialty Fashion Group shares are up 3.6% to $1.43 at the time of writing, a 52-week high.

Specialty Fashion Group sold off several key brands to fellow small cap retailer Noni B Limited (ASX: NBL) earlier this year, retaining its City Chic brand after collecting $31 million in cash from the divestment.

Despite its inclining share price, non-executive director Michael Hardwick bought 100,000 shares in late September.

It’s usually a good sign when company insiders put their own money into the pot, especially when they’re already on a high.

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Motley Fool contributor Carin Pickworth has no position in any of the 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 Scott Phillips.

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