Both companies released half-year results this week, leading to massive share price gains. 

Let's see what investors were reacting to. 

Cogstate

Cogstate is a neuroscience technology company specialising in brain health assessments. The principal activity of the company is the sale of technology and services to measure cognition.

It released 1H FY26 results yesterday, which included: 

• Group Revenue of $26.9m, up 12% on previous corresponding period ($23.9m)
• Net Profit After Tax of $4.5m, up 16% on pcp ($3.9m)
• EBITDA of $6.5m, up 5% on pcp ($6.2m) with an EBITDA margin of 24% (pcp 26%)

Cogstate CEO, Brad O'Connor, said: 

These results demonstrate Cogstate's growing momentum and the increasing strength of our competitive position. We're seeing record levels of sales opportunities from an expanded customer base across more therapeutic indications, and those opportunities are converting into meaningful contract wins.

Investors were gobbling up this ASX small-cap stock following the results as the share price climbed 8.7% on Thursday. 

Austco Healthcare

Austco Healthcare engages in the development, manufacture, and supply of hardware relating to healthcare and electronic communications systems. 

The company reported H1 FY26 results on Wednesday, which included: 

• Revenue from customers up 30.7% to $48.2 million
• EBITDA grew 60.1% to $8.3 million
• Net profit before tax up 62.1% to $6.3 million

This ASX small-cap obviously impressed investors with these numbers, as the share price has risen 20.3% since the announcement. 

What are brokers saying about these ASX small caps?

Following the results, brokers released fresh guidance on both of these small-cap shares. 

In a note out of Morgans, the broker was impressed with the results from Cogstate. 

It said the company posted a strong 1H26 result and expects a stronger 2H than previously anticipated. 

CGS continues to broaden the number of indications it targets, which in turn is generating an increase in sales contracts. In the 1H26, US$41.7m of sales contracts were executed across Alzheimer's (38%); Mood, Sleep & Other Neurology (45%); Rare Disease (15%); and Cancer (2%). We note the FactSet consensus target price is A$3.08, which represents 41% upside to the last close.

On Wednesday, Bell Potter released updated guidance on Austco Healthcare shares. 

The broker said the company is delivering on the key catalysts of conversion, efficiency, product enhancements, and geographic expansion. 

The strong performance of the acquired businesses and the 5-yr revenue target of $250m pa leads to the possibility of more M&A. Given undemanding trading multiples, and material upside, the share price presents as an attractive entry point.

Bell Potter reiterated its buy recommendation and $0.55 price target on this ASX small cap. 

From yesterday's closing price, that indicates an upside of 44.7%. 

The post These two ASX small caps shot higher 8%-20% on earnings results appeared first on The Motley Fool Australia.

However, earlier this afternoon, Austco shares were up by more than 18%, swapping hands for a 52-week high of 16 cents apiece intraday.

Austco is a microcap creating healthcare communication solutions. One of its major solutions is a nurse call system which it believes is the most advanced of its kind. It also provides a reporting and analytics platform for nurse call data and a mobile platform for its nurse call solution.

Let's take a look at what Page had to say about Austco Healthcare today.

ASX pile-in

This afternoon, Page appeared on television program ausbiz stating he believed Austco shares could be a "'life-changing stock".

According to a Twitter Inc user, after Page's appearance, the number of trades involving Austco shares increased 15 times over.

Page replied to the Twitter user saying it was "really silly for people to pile in like that".

In the program, Page commented on the risks associated with investing and noted the additional risks involved with investing in small companies. Of his recommendation, he said:

[picking a 'life-changing' stock] is a game that you have to go to the risky end of the spectrum… It's an area where you only get 3 or 4 out of 10 [recommendations] right.

He went on to explain why he believes Austco shares make a solid investment for his own portfolio, saying:

This is a profitable company. They're making about $3 million in profit. No debt. $6 million in cash. High inside ownership…. I think they've got a lot of potential here. If they can keep implementing these solutions [and] continuing to win, there's a lot of upsides.

Those interested can watch the entire segment here.

Austco Healthcare share price snapshot

Thanks in part to today's gains, the Austco share price is sitting more than 56% higher than it was at the beginning of 2021. It has also gained around 96% since this time last year.

The company has a market capitalisation of around $44 million, with approximately 284 million shares outstanding.

The post Why did the Austco Healthcare (ASX:AHC) share price rocket 15% today? appeared first on The Motley Fool Australia.

Founded in 1986, Austco is a global manufacturer of nurse call systems and clinical communications solutions for hospital and aged-care facilities.

The healthcare company's share price spent most of the afternoon up around 8% trading at 13 cents, before surging higher in the final moments of trade. The Austco share price closed the day at 14 cents, up 12.5%.

Austco expands client base

Investors are buying up Austco shares in light of the positive update made to the ASX this morning.

According to its release, Austco advised it has been selected to supply its Tacera Nurse Call platform to Khoo Teck Puat Hospital (KTPH)

Based in Singapore, the KTPH is a 795-bed general and acute care hospital. The building services more than 550,00 people living in the northern sector of Singapore.

KTPH is a part of Yishun Health, a network of medical institutions and health facilities under the National Healthcare Group. This comprises Admiralty Medical Centre, KTPH, and Yishun Community Hospital. It also includes community extensions such as Wellness Kampung.

Austco said the $3.3 million contract with Yishun Health would ensure that patients at KTPH received a high standard of personalised care.

The Tacera platform includes call points with built-in real-time locating system (RTLS) and webservices interfaces. In addition, software such as enterprise reporting and analytics and dashboards are to be included.

Austco CEO Clayton Astles commented:

We are excited to partner with the Khoo Teck Puat Hospital.

At Austco, we are constantly looking for ways to enhance our innovative solutions and our recent updates to the exceptional Tacera nurse call system delivers a world-class experience for healthcare facilities and every patient.

The Tacera Nurse Call platform is being planned for deployment in the first quarter of FY22, with completion by December that year.

Austco share price summary

Over the past 12 months, Austco shares have accelerated by more than 50%, and are up over 25% year-to-date. The company's share price reached a multi-year high of 15 cents early last month.

Based on today's price, Austco presides a market capitalisation of roughly $35 million, with approximately 284 million shares outstanding.

The post Here's why the Austco (ASX:AHC) share price is rocketing 12% today appeared first on The Motley Fool Australia.

The PGC share price jumped 9.6% to 46 cents as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) and the All Ordinaries (Index:^AORD) (ASX:XAO) indices gained less than 0.5% each.

However, the stock has still lost nearly half of its value in FY19 even though other medical equipment stocks like the Azure Healthcare Ltd (ASX: AZV) share price, Nanosonics Ltd. (ASX: NAN) share price and RESMED/IDR UNRESTR (ASX: RMD) share price have made good gains over the past year.

Turning on an Axis

The Paragon share price should have also held up well amid the uncertain economic outlook but investors have been spooked by its restructure under new chief executive Andrew Just.

The company believes the sale of Axis Health marks a significant milestone in Paragon's transformation programme, which aims to increase the group's focus on "high end technologies and recurring revenues".

While the divested business generated around $20 million in revenue, or 8% of group sales, it made a pre-tax loss of $4 million to $5 million in the last financial year. This will force management to take a circa $25 million write-down due primarily to goodwill, stock value reductions and IT impairments.

Cabrini, which is a highly recognised provider of hospital and age care facilities, will pay $1.8 million upfront in cash to Paragon and $2.7 million over the next 12 months. The buyer will also take responsibility for the 50 staff working at Axis Health and all properties used by the business.

A cleaner and leaner group

Paragon explained that the remaining businesses are less commoditised, less competitive and command higher margins. Management is also anticipating further significant savings from its cost reduction and efficiency initiatives that are currently under way.

"This is a clean sale of our legacy capital businesses to a well-respected buyer who is strategically focused in this sector to more efficiently manage this portfolio of businesses. We are pleased to now focus on our continuing portfolio of stronger margin products and services," said Paragon's chairman, Shane Tanner.

"The sale is consistent with our strategic direction and should prove to be a major positive for Paragon as we move into the 2019/20financial year".

Paragon grew very quickly through an aggressive acquisition strategy and the refocusing of the group in more recent times introduces a different kind of execution risk.

Today's asset divestment will help to alleviate some of the worry and the stock could be worth keeping an eye on.

If you are wondering where else you should be looking for opportunities, the experts at the Motley Fool can provide a few hints. They've produced a report on stocks that are well placed to outperform in FY20 and you can find out what these are by following the link below.

The post What you need to know about the surge in Pargagon Care's share price appeared first on The Motley Fool Australia.

Oneview offers software for the healthcare network, such as hospitals, clinics and medical centres. The company recently announced that its Mobile Patient Engagement Platform had gone live at Sydney Children's Hospital at Westmead. The software links patients to their care before, after and during their stay.

Displaying its flexibility, Oneview's My Health Memory platform is an entertainment and communication platform for parents, with free access to Foxtel, Skype, web browsing games, movies on demand and free-to-air TV. Combined, Oneview's systems should allow patients to manage their care better, as well as reducing the workloads of nurses and doctors.

So far, Oneview has installed its products into 20 healthcare facilities across the United States, Australia, the United Arab Emirates and Ireland, and in March 2017 was expected to add another 15 facilities to that list. The company is also planning to expand into aged care facilities in the near future – as they have similar requirements for patients as hospitals and clinics.

So why has the share price of this healthcare technology stock jumped today? Simply because it is highly illiquid, with only 28,000 shares changing hands – worth just $115,000 in three trades. One trade accounted for just over 26,000 shares as well. Given the illiquidity, Oneview's share price could easily sink more than 12% tomorrow if a seller wants to get rid of their shares for whatever price they can get.

For investors considering dipping their toes in, the key to watch will be the quarterly cash flow reports and the 2017 half year results when they are released in August. With many technology companies, they may announce contracts with new clients, but in some cases, those will only be trials or short-term pilots. The key will be generating revenue from those contracts.

Foolish takeaway

Oneview could end up becoming the next Pro Medicus Limited (ASX: PME), which now boasts a market cap of $530 million, if it is successful. However, there are plenty of disappointments in the healthcare technology space, including Azure Healthcare Ltd (ASX: AZV), which looked promising but has a market cap of less than $20 million these days. Investors might want to check out the report below for more ideas.

The post Why the Oneview Healthcare PLC share price jumped today appeared first on The Motley Fool Australia.

That's been the lesson for the past week or so of trading, thrown into stark relief by the beat-up of Slater & Gordon Limited (ASX: SGH) shares. Elsewhere in the market we've seen a general decline in roll-up businesses like G8 Education Ltd (ASX: GEM) and Affinity Education Group Ltd (ASX: AFJ) as investors grow nervous about whether the roll-up model is really good business.

While Azure Healthcare Ltd (ASX: AZV) crashed on old-fashioned disappointed expectations. Here's what you need to know about the declines in these stocks.

Slater & Gordon Limited – last traded at $3.67, down 26.7% in the past year

The recent history of Slater & Gordon has gone something like this; market announcement, shares drop $1, market announcement, shares drop $1, market announcement… shares drop $1.

According to Fairfax media reports, the number of shares held for short-selling are currently 8.7% of Slater & Gordon's total float, up from 8% a week ago and a substantial increase from February earlier this year.

With such high short interest and significant uncertainty still remaining over the outcome of the ASIC investigation into SGH, I think investors are better off steering clear of the stock. High share prices have been key to Slater & Gordon's growth by acquisition (funded by share issues) and despite an attractive valuation I think shares could well go lower in the short term.

G8 Education Ltd – last traded at $3.23, down 29.4% in the past year

Lower stock prices are also a concern for G8 investors, this being another company that uses frequent issues to fund growth by acquisition. Investors have been selling out recently over fears that growth has come to a halt and that the company's 6.7%, fully franked dividend may not be sustainable.

This is a real concern, but so far I have not seen anything that is a deal-breaker for my investment. My biggest question going forward will be how management approaches the business and the low share price going forward.

I will be looking to see some effort to improve the financial performance of existing businesses and a more cautious approach to new acquisitions. In the short-term I think share prices could go lower as investor nervousness over the roll-up strategy grows.

Azure Healthcare Ltd – last traded at $0.14, down 58.8% in the past year

Confession season!

Micro-cap healthcare technology business Azure Healthcare shares plummeted this week after management confessed in a market update update that Net Profit After Tax (NPAT) for the year to June 30 would be substantially lower at $0.8-$1 million compared to $3.87 million in the prior reporting period.

This is a direct result of higher investment in staff and technology in the past year. Azure Healthcare has played it as fuelling growth for the next 12-18 months, but I suspect investors were also disappointed with revenue growth of 12% in the past 12 months.

Shareholders will want to watch how growth plays out over the next 12 months, but Azure shares have taken quite a beating this year and I think they have gone roughly as low as they will go in the absence of further bad news.

Investors searching for tomorrow's success stories have had a keen eye on Azure Healthcare for a while, but there's two more stocks with rapidly growing revenues that are well worth a look at today's prices…

The post 3 stocks at 52-week lows – are they a turnaround story? appeared first on The Motley Fool Australia.

Confession Season

This time of the year, typically through June and July, is what's known as 'confession season', which comes shortly before earnings season in August. The reason why we're seeing a rash of downgrades is that companies are starting to pull together their financial results for the half or full-year and are realising that the numbers aren't looking as good as they were hoping.

Here are six companies that have announced confessions and should be avoided for now:

Azure Healthcare Ltd (ASX: AZV) shares were smashed over 40% in two days following an earnings update to the market in which it announced a 12% increase in revenues to $35 million but a massive increase in investment to $4.7 million during the period, compared to just $2.6 million for the previous corresponding period.

SEEK Limited (ASX: SEK) shares were sold down 14% on one day when it announced one-off issues with its SEEK Learning division due to an IT systems upgrade undertaken by TAFE NSW.

Flight Centre Travel Group Ltd (ASX: FLT) shareholders suffered a 23% loss of capital in just one day in June when Flight Centre announced that it expected full-year underlying profit before tax (PBT) to be between $355 million and $365 million, the mid-point of which is at the bottom of the company's previously targeted range of $360 million to $390 million.

Woolworths Limited (ASX: WOW) shares are sitting around its 52-week low following a disastrous month where the CEO departed and the company downgraded earnings for the second time in just four months!

Nine Entertainment Co Holdings Ltd (ASX: NEC) downgraded Group EBITDA (before Specific Items, and inclusive of Nine Live) for the year ended 30 June 2015 to the range of $285m to $290m from $311m expected previously. The shares have headed downwards since and could go much lower.

Slater & Gordon Limited (ASX: SGH) didn't really downgrade guidance but has been downgraded by analysts following the unearthing of questionable accounting practices. I'd be wary investing in the company until more is known of the impact going forward.

The post 6 ASX stocks to avoid this earnings season appeared first on The Motley Fool Australia.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) and ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) have both been crushed 2.3% in what has been one of the most severe sell-offs in years whereby very few companies have been spared.

While the market itself copped a beating, these stocks fared even worse…

Slater & Gordon Limited (ASX: SGH) is once again the worst performing stock from the ASX 200 group. The stock plunged by as much as 30.6% to an 18-month low of $3.50 after the Australian Securities and Investments Commission confirmed a probe into its relationship with audit partner Pitcher Partners. The stock has now plummeted 45.7% since Wednesday last week.

South32 Ltd (ASX: S32) shares were crunched 4.7% as investors continued to pile out of the freshly listed mining giant. A number of South32's commodities have fallen in price considerably since its debut with some analysts forecasting a significant impact on the group's future earnings potential. The shares hit a high of $2.45 last month and have since fallen to just $1.74.

BC Iron Limited (ASX: BCI) has fallen 6.4% on the back of bearish forecasts for the future price of iron ore. Although it currently trades for around US$62 a tonne, Capital Economics predicts it will fall below US$40 a tonne in the second half of this year as a result of surging low-cost supplies, according to the Fairfax press. That does not bode well for BC Iron, nor any of Australia's iron ore miners.

Azure Healthcare Ltd (ASX: AZV) tumbled 37.3% on the back of a downgraded earnings guidance issued after the market's close on Friday. Although the medical device manufacturer expects to achieve 12% growth in revenues for the year, it said it expects net profit after tax (NPAT) to be between $0.8-$1 million, compared to the $3.87 million achieved in the prior corresponding period. This was the result of a heavy increase in research and development expenditure which increases the risks associated with an investment in the company.

Retail Food Group Limited (ASX: RFG) fell 4.2%, despite the absence of any bad news from the company which would specifically explain the fall. The stock has fallen well below its 52-week high levels as investors become concerned about slowing growth as well as an $18.5 million non-cash write-down which will impact group earnings this year. The stock now trades at $5.46 and could be a reasonable bet for long-term focused investors.

Given that the losses have spread like wildfire, very few investors have remained unscathed. The market's confidence is right down and many are choosing to sell out in a panic, limiting their losses but offloading their shares at heavily discounted prices.

Indeed, there is no way of knowing exactly how severe this sell-off could be, nor is it clear just how long lasting the impact of a potential 'Grexit' (Greek exit) will be. As difficult and terrifying as it may be, investors need to ensure they remain calm and composed, and that they don't join the hordes running for the exits.

The post Why these 5 ASX stocks were routed today appeared first on The Motley Fool Australia.

So What: To be clear, when a company provides a market update after the market's close on a Friday afternoon, it's almost certain to be bad news. That was certainly the case with Azure Healthcare, which said it now expects a net profit after tax (NPAT) in the range of $0.8 million to $1 million for the 12 months to 30 June 2015, compared to the $3.87 million it achieved during the 2014 financial year.

Although the company expects to announce a 12% increase in revenues to $35 million, it increased its expenditure on staffing and research and development significantly to "resource itself for future anticipated growth". In fact, this investment ballooned out to $4.7 million during the period, compared to just $2.6 million for the previous corresponding period.

Commenting on the guidance Azure's Executive Chairman, Robert Grey, said: "Our increased investment resulted in higher operating expenses over the period, leading to an overall reduction in group earnings from the previous corresponding period. However the Azure Board remains committed to the Company's long-term global growth strategy, including transitioning manufacturing and research and development to the largest healthcare market (the United States)."

Now What: An increase in research and development spend could certainly bode well for the company in the long run, but it also increases the risks facing the business today whilst also significantly impacting near-term profits. Although its forecast 12% revenue growth isn't too bad, it's certainly not enough to comfort the market based on these new developments.

The shares plummeted a massive 39.2% (or 10 cents per share) to trade at just 15.5 cents, which compares to a 1.6% smashing for the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO).

The post Azure Healthcare Ltd crumbles on earnings guidance: What you need to know appeared first on The Motley Fool Australia.

The case for

• Little companies typically have fewer business lines than large ones and so it is more likely that a single event could damage a small business to the extent that it could not recover. This risk can be overcome by holding a large number of diversified small-caps, but this also erodes returns.
• Small stocks are generally more volatile, thanks to less liquidity, less efficient pricing and because the underlying businesses themselves are more changeable. Holding volatile stocks is a painful experience and it requires a high level of conviction to resist the temptation to sell.
• Most large companies have a solid track record of consistently delivering profits and so there are few poor businesses of this size. In contrast, there are many terrible companies at the bottom end of the market and so it is harder to pick strong ones.

The case against

• Small companies are less efficiently priced because there are fewer participants in the market. Most of the money is held by large institutions that have no reason to buy small stocks, since such holdings would have an insignificant effect on their returns. Inefficiency provides more opportunity for investors to pick up bargains which reduces risk.
• Small companies are often easier to understand than large ones because they are much simpler. This makes them easier to value, although their value can change fast since they are capable of growing quickly.
• Really, it is not about whether small stocks are riskier than large ones, but whether they deliver superior risk adjusted returns. Small-caps can offer greater returns thanks to the possibility of faster growth, if they are no more risky than large stocks then clearly they offer a preferable investment proposition.

Here are three small-caps with the potential to deliver high returns.

Capilano Honey Ltd (ASX: CZZ)

This honey distributor and packer is a widely known brand and controls much of the supply of Australian honey both domestically and internationally. The company is benefitting from the trend towards healthier living and I estimate that it is trading on a forward looking enterprise value to free cash flow ratio (EV/FCF) of less than 15.

Azure Healthcare Ltd (ASX: AZV)

Azure Healthcare is a global manufacturer and distributor of nurse call systems and is cementing its position within this niche industry through expansion into the US. Thanks to recent technology gains, nurse monitoring devices are becoming increasingly important in helping hospitals operate more efficiently. Demand is expected to grow as populations around the world age and according to my calculations, Azure's normalised EV/FCF is currently around 16.

Empired Ltd (ASX: EPD)

Thanks to a series of sizeable acquisitions, Empired has been able to grow its service offering, which has led to the award of four significant contracts since the start of March. It is also benefitting from the growing acceptance of cloud computing and the associated shift towards outsourcing of organisational IT functions. If the company can meet its profit margin goal of 12.5% earnings before interest, tax, depreciation and amortisation, then it is likely to trade on a forward price to earnings ratio of less than 10.

Foolish takeaway

Ultimately, whether you choose to invest in mainly large or small stocks is a personal choice that depends on specific circumstances. For example, do you have the temperament to accept a high level of volatility? Do you have the time or inclination to trawl through all the rubbish at the small end of the market to find the odd hidden gem?

Regardless of which category you fall into, every investor can learn something from the greatest of our time, Warren E Buffet. As Benjamin Franklin said, "An investment in knowledge pays the best interest."  To find out more, just follow the link below.

The post 3 top small-caps for your watch list appeared first on The Motley Fool Australia.

40% Jump!

Amazingly, the shares made up a lot of the loss on Tuesday when the company's shares extended early gains to finish up 27% at the end of the day. The sharp change in investor sentiment appears to have come after an analyst released a note saying that he had spoken with the company and that the fall in net profit was, in fact, due to start-up costs associated with four sizeable recent contract wins.

Lessons to be Learnt

I believe there are a few lessons to be learnt here:

1. The disclosure practices of Azure Healthcare's management team needs some work.
2. Investors should try to unearth the full background of an announcement before jumping to conclusions.
3. Long-term investing is best.

Azure's management team, led by chairman and CEO Robert Grey have had a reasonably poor history when it comes to comprehensive reporting and Monday's announcement is no exception. Investors that took the announcement on face value could have assumed that the fall in net profit was a result of poor management or an unexpected fall in sales, when the opposite appears to be the case. Long-term investors may find that the share price recovers quickly and that doing little was the best course of action.

So what happened? Should you be worried?

The analyst responsible for the 'calming' note to clients pointed out that Dr Grey said that new staff were required in the USA for four new contract wins that would not contribute to earnings until the second half of the financial year. The total full year cost of these hires would be in the realm of $1.3 million, which implies that full-year profit is on target for between $2.9m to $3.7m, before considering the impact of the new contract wins.

I'm in no position to say whether this will come to light, but the information at hand indicates that the announcement could have been a positive for the company, but instead was made out to be a massive negative.

The post Azure Healthcare Ltd plunges 50% and then jumps 40%: Should investors be concerned? appeared first on The Motley Fool Australia.

The banks led the way down, although Westpac Banking Corporation (ASX: WBC) went ex-dividend today, with 92 cents of the $1.37 fall attributed to that.

Here are 4 other companies who have seen their share prices savaged by investors today…

Azure Healthcare Ltd (ASX: AZV) saw its share price almost halve, losing 46.7% to close at just 24 cents. The company today announced that it expected its first half profit for the six months to end of December 2014 to come in between $0.8 million and $1.2 million, compared to $2.2 million in the previous year. It seems the company has increased spending on staff and R&D expenditure to "resource itself for future anticipated growth". The price fall seems rather harsh in those circumstances.

Anteo Diagnostics Ltd (ASX: ADO) lost 11.5% to 11.5 cents today, with investors obviously not pleased with the company's annual general meeting (AGM) update. Was it the millions of options issued to directors, more shares issued under the Executive/Employee Share Plan, or approval of an additional 10% placement capacity? It could be all of the above, which could see shareholders existing holdings diluted. It seems clear that some companies don't get that retail investors are waking up to the fact they get excluded from institutional placements and are voting with their feet.

Boart Longyear Ltd (ASX: BLY), the drilling services and equipment supplier, dropped 11.1% to 20 cents, despite no news from the company. Boart recently announced that it had partly refinanced its Senior Secured Notes which were due on October 2018. Ongoing doubts over the company's ability to continue to operate may well have weighed on investors minds, and the recent run up in price from around 14 cents may well have been a 'dead-cat bounce'.

Photo-mapping company Nearmap Limited (ASX: NEA) saw its shares pummelled down 9% to 70 cents, possibly as a result of the strong price appreciation in recent weeks. Despite today's drop, Nearmap shares have rallied 36% since October 13, after the company announced its expansion into the US. Given the potential in the US market, Nearmap says it wants to achieve sales of between $30 and $50 million there by December 2017, but given its success in Australia, that may be a conservative estimate.

The post 4 ASX stocks savaged by the market today appeared first on The Motley Fool Australia.

The reason is with the low Aussie dollar, their earnings from countries like the US will be expanded because of the currency exchange shift.

Now the Aussie dollar is weaker around US 87 – 88 cents, but some forecasts are calling for it to head even further down to around US 80 cents.

These three companies are already looking forward to solid earnings growth and the currency movement is the kicker to boost potential profits even more.

Sirtex Medical Limited (ASX: SRX) is up 41% in the last six months as it is waiting for clinical trials on its specialised liver cancer treatment to conclude. If the results for its SIR-Spheres targeted cancer fighting product are positive, it might become a "first line" treatment alongside regular chemotherapy and radiation. Dose production is anticipated to triple in volume as a result.

The earnings growth potential is great, yet you have to pay a premium for the stock currently. I would keep this one on the watchlist and hold off on buying until more of the market hype comes out of the high price.

Cochlear Limited (ASX: COH) is the hearing aid and bionic ear device maker. It holds about 60% of the Cochlear implant market in the US and a number of new product releases on the market are driving orders and revenues. The stock has climbed around 20% since February on the expectation that earnings will be higher than in FY 2014, due to the demand for its hi-tech products.

Azure Healthcare Ltd (ASX: AZV) is an $82 million provider of healthcare communications and clinical workflow management solutions. It operates in six countries and supports 8,500 healthcare facilities. About 30% of its revenue comes from the US and 55% from ANZ. It may be a small company, but net profit went from $1 million to $3.9 million in FY 2014. It has set up a new production plant in the US to meet the strong growth there. In the past six months, the stock rose almost 39% and currently has a 21 price-earnings ratio. It may be early days, but you should at least have this one on your radar.

Specialised medical products and technologies can be great earners because of the constant and high volume demand for healthcare solutions. Similarly, tech stocks also are a good way to round out your portfolio and make sure you have solid growth.

Disruptive technologies especially have that potential to shake up established markets, like a Google or Apple, and make new winners as the playing field changes.

The Motley Fool has just released a special video report on our analysts' #1 ASX tech pick -– all about the one Australian company poised to win big from the 'cloud computing' trend.

(Hint: The shares are already up over 100%!) Click here to claim your FREE copy.

The post 3 hot healthcare stocks to make your returns healthier appeared first on The Motley Fool Australia.

1) Thinking that the more know you about a company, the less risky it is to invest in; and,
2) Failing to adequately consider the possible downside, or investing too much in any single company.

Some lucky people will invest heavily in the right risky stock, but others will choose the wrong one. You can avoid that worry by diversifying your portfolio. I aim to own 10 – 25 different stocks for the rest of my career, but anything less than eight is usually quite risky.

Some time ago I mentioned I'd bought Azure Healthcare Ltd (ASX: AZV) at 27.5c, and that risky investment has turned out well, with the company's share price up over 70% on the back of strong profit growth.

Motley Fool contributor Peter Andersen has opined that he thinks there is plenty of value left, even at above 45c. I'm extremely hesitant to disagree with Peter because following his recommendations has made me good money. We even disagreed about David Jones Limited (ASX: DJS), and I turned out to be wrong! However, I tend to agree with those who think Azure is a hold, rather than a buy, at the current price of 48 cents.

Interestingly, key personnel (including the CEO) have been selling down over the last few months, at prices ranging from around 25c to 45c today. In any event, there's no doubt the company – which sells monitoring and administrative systems to hospitals – is sure to benefit from healthy tailwinds for many years to come.

Another little company growing profits for shareholders is MGM Wireless Limited (ASX: MWR), which provides nifty roll-marking systems and apps that can track students' whereabouts.

The core business is a system whereby schools and daycare centres can send mass-SMS messages to parents should the need arise. Although the company is somewhat vulnerable to its wholesale telecommunications providers, I really like the fact that it has an existing commercial relationship with so many schools, its business is scalable and the services are sticky.

The company has just gone into a trading halt "pending release of an announcement regarding the award of a contract by a state education department." Cross your fingers for me – I hold shares in this one too, bought at around the current price of $1.20.

I have also previously mentioned medical device maker Nanosonics Limited (ASX: NAN), which despite earning plenty of revenue, is yet to record a full year net profit. Although gross profit is following a pleasing trajectory. 

Furthermore, I've probably been a bit too slow to appreciate the fact that at a certain point, hospitals will likely rush to buy the company's Trophon EPR product, which offers a superior way to sterilise ultrasound probes. Infection arising from inadequately sterilised probes literally kills people, and given the litigious culture in the USA, it seems likely hospitals will move to minimise the chances of being sued. 

The post These 3 stocks could shoot the lights out appeared first on The Motley Fool Australia.

In Australia Azure has 50% of the aged care market and 35% of acute care. Initial installation (including software) prices per bed are approximately $4,000 in acute care and $700 in aged care. Once installed annuity style income is derived from service agreements, software upgrades etc. The major competitor in Australia is Hills Industries, although Azure's range and quality is regarded as superior.

Having now established two manufacturing operations in the USA, Azure Healthcare is making inroads into the high growth North American markets. Take up rates have been promising and there is every indication the Americas will prove very rewarding for this company. In addition Azure Healthcare has operations in Asia and Europe and further growth can be expected in these regions.

In FY2014, Azure's revenues increased by 40% and net profit 300% (off a low base). Presently selling at 48c, Azure is on a PE multiple of 23.5 – however this is no mature industrial stock, and I prefer to use the PEG ratio when looking at such a company (the PEG ratio is derived from dividing the price earnings ratio by the expected growth in earnings).

Using fairly conservative assumptions (no change in A$; offshore growth of 30%+pa; domestic growth of 12%pa; more comprehensive alliances / distribution arrangements and increased percentage of higher margin software sales from existing sites) – net profit can be expected to increase by 27%+pa over the next few years. If realised this places Azure on a current PEG ratio of .87 (normally anything below 1 indicates prospectively good value).

Another thing I like about this company is that both R&D and set-up costs are expensed rather than capitalised – this is a conservative treatment and relatively few companies do it. In my opinion Azure Healthcare has an attractive PEG ratio, no debt and strong growth expectations – all ingredients for a good buy.

The post Why Azure Healthcare Ltd looks a great buy at current prices appeared first on The Motley Fool Australia.

Could there be more to come?

Let's take a closer look at the four stocks…

Orora Ltd (ASX: ORA) has soared 8.8%, after the packaging company reported a 44.8% increase in net profit to $104.4 million for the 2014 financial year, beating analyst expectations. Orora was spun out of packaging giant Amcor Limited (ASX: AMC) in December 2014. The company's chief executive Nigel Garrard says the company is looking for acquisitions to drive further growth, "Bolt-ons will be part of our strategy," he said.

Azure Healthcare Ltd (ASX: AZV) has jumped more than 11%, and is up 16.9% since last week. It appears that investors have finally digested the company's upbeat full year report released last week. Azure reported a 300% jump in earnings per share, as demand for its hospital monitoring systems rises. More gains could be on the way, but investors might have to get in quick – as the company has already received one takeover offer.

Patties Foods Limited's (ASX: PFL) shares are up 9.1% to $1.32. The maker of pies and savoury treats including the iconic Four'N Twenty meat pies and Nanna's desserts reported a 2% fall in underlying net profit to $16.7 million, on flat sales growth. Patties says the second half of the year was strong, up 5% versus the previous year and remains committed to driving earnings growth. Unfortunately, the company's major customers include Coles and Woolworths Limited (ASX: WOW) which may view Patties' result as an opportunity to drive further cost cuts from the supplier.

Carnarvon Petroleum Limited (ASX: CVN) continues its gains, rising 14% today, and shares are up 206% in the past two weeks. As we mentioned last week, Carnarvon appears to have found a substantial oil discovery, which could pay big dividends to shareholders. Shares in the company are still less than half the price they were in 2011, but the outlook appears much better today.

If you're after dividends, plus growth and a cheap price, you can't go past this stock, which has been named our top dividend stock of 2014-15.

The post 4 ASX stocks soaring today appeared first on The Motley Fool Australia.

Not only have healthcare stocks outperformed over the last five years (as the chart below demonstrates)…

…but this outperformance is likely to continue over the next five years.

Here's why:

1) Healthcare is non-discretionary. Even those living frugally will be willing to spend on healthcare, whether it be to stay alive or ease discomfort.

2) As the population ages it will have greater need for healthcare, and a greater proportion of the ailments will be ongoing, rather than curable in a finite timeframe.

3) Plenty of companies within the healthcare industry (broadly) can generate sticky revenue. Patients build trust with their doctors, and are unlikely to change them until they pass away. If medicines are working, they will continue to be used. Professionals and institutions are unlikely to change service providers or product suppliers for minor benefits, as the disruption is too great.

For blue-chip exposure to healthcare, it's hard to go past Cochlear Limited (ASX: COH), which manufactures (and sells) hearing implants. The market is currently worried that Cochlear's margins are under threat from competition, but the company has just launched its latest product, the Nucleus 6, and there is a strong chance that its release will improve sales for the company. Another favourite of mine is ResMed Inc. (Chess) (ASX: RMD), which sells the S9 sleep therapy system to treat sleep apnoea. ResMed is sure to grow sales as it expands internationally and populations age. Obesity is a major cause of sleep apnoea as well, so lifestyle trends are also driving demand for the company's products.

Personally, I prefer to invest in smaller growing companies such as Azure Healthcare Ltd (ASX: AZV) – a company I hold in my portfolio. Azure makes both the hardware and software components for hospital monitoring systems. Last month I complained that CEO Robert Grey had failed to get back to me, but it turns out he had made the decision not to talk with analysts because the company had received a takeover proposal. Azure Healthcare shares are up 420% in the last year, and Grey attributes the turnaround to "all the dedicated staff within the business." The team has boosted sales so much that the company will make record shipments in May 2014.  It's fair to say I have a fast-growing admiration for the company (and a belly full of humble pie).

The post 3 reasons health stocks rock and 3 stock ideas appeared first on The Motley Fool Australia.

It was less than two months ago that I wrote about Azure Healthcare Ltd (ASX: AZV). A small company that sells hardware and software designed to monitor patients in hospitals and other institutions (including jails!). Since that article, shares are up about 20%. The thesis was pretty basic: operating leverage would send profits rocketing up, and increasing pressures on hospitals would have them keen on a more efficient administration system. This is particularly true in the USA, where the profit motive encourages hospitals to cut costs. The company hasn't reported since then, but they have announced a potential takeover.

It's worth mentioning that Azure Healthcare recently didn't announce that it will lose a key person, Nathan Buzza, who was responsible (in large part) for the most important part of the business. The reason that the software business (overseen by Buzza) is so important is that the margins are far better than the hardware business. Indeed, it was only once Buzza (and Robert Grey) rejoined the company that its fortunes turned around.

I found out a little while ago that Buzza would leave the company. Indeed, I've been tardy bringing this information to you: the knowledge is already in the public domain. More important is the fact that I emailed the CEO Robert Grey to suggest that the company announce the news (as I believe it is market sensitive) and he didn't reply (perhaps he did not notice it, or I sent it to the wrong address). As a share analyst it's always tempting to remain in the good graces of management, because your access to them depends on it. However, this creates problems when you need to report something negative. If you ever find a CEO who is fast to engage with criticism, note their name: they truly are a rare kind of leader.

More to the point, Azure Healthcare has recently announced that it received a non-binding takeover proposal from a party they did not name at a price they did not specify. Interestingly, the share price rallied prior to the release of this information, subsequently reaching a high of 41.5c the day of the announcement. I believe any takeover offer below 38c would not be a serious bid, not least because the superstar team at Pie Funds have come to the conclusion that shares in the company are "worth 36c and possibly 40c in a takeover." Personally, I think shareholders will be shortchanged if the company sells for anything less than 40c per share, but I would not buy at 36c or above.

Speaking of my favourite institutional investors, another pick of theirs that has my attention is Money3 Corporation Limited (ASX: MNY). Pie Funds own over 5% of the company, which is still guided by its founders and specialises in lending money to people who can't get a loan from a bank. Personally, I don't feel great about the ethics of such businesses (some people simply shouldn't be borrowing), but I'm willing to withhold judgement – for all I know, the helping hand could really change someone's life for the better. I do mention the ethics because questionable lending practices have lead to stronger regulation of some lenders. In particular, Cash Converters International Ltd (ASX: CCV) was hit hard by regulators last year, though the share price has recovered somewhat since then.

I think it's worth keeping tabs on what successful market participants are thinking, and it's certainly a positive that the top momentum traders at Asenna Wealth Solutions have taken a position in Money3. As a value-based investor, I'm not buying shares, but if Money3 does manage to sustain its growth, the share price will appreciate over time. The fact that the company has bolstered its online presence is a positive, and I'd hazard a guess that the guys at Pie Funds see some positives for the sector, since they also have an investment in Careers Multilist Ltd (ASX: CGR), which has a cashflow financing business that advances cash to companies with sufficient inventory.

Foolish takeaway

I tend to avoid impulsively following other investors – that is unlikely to lead to great results over the long term. However, I can't deny that some of my best investments have been influenced by other market participants. Generally, if I've formed an opinion about a company, and an investor I admire agrees, that can bolster my confidence. Historically, this has worked out to my benefit. Don't mindlessly follow anyone – but take note of those you respect. When you independently agree with an investment, the actions and research of others are a very valuable second opinion.

The post Smart money small-caps: Azure Healthcare Ltd and Money3 Corporation Limited appeared first on The Motley Fool Australia.

Blood products group CSL has been a phenomenal stock for investors who bought in back in the mid-1990s for under $1. CSL is currently trading just a little above $70 and has been an incredibly consistent performer for long-term investors.

But are there any companies out there that could be similarly great? Who are the up-and-coming companies in the healthcare space?

Well, there are plenty of listed emerging biotechnology stocks, but I think that until they can demonstrate proven technology and strong operating cash flows they are best avoided by most investors.

Rather, I believe there are some big opportunities in the healthcare technology field. Two companies that are competitors but look to be growing side by side are Hills Ltd (ASX: HIL) and Azure Healthcare Ltd (ASX: AZV).

Azure Healthcare

Azure is an integrated software and hardware provider of nurse call systems with exposure to Australia, the US, Asia and Europe. The nurse call system market appears to be fragmented in Australia, and a recent US study indicated that the software side of the market is growing at 20% annually. Azure recently won a significant contract to provide software for nurse call systems in 100-150 hospitals in the US, which will hopefully provide a solid platform for further expansion in the country. Importantly, in my eyes at least, Azure won this contract over the largest nurse call provider in the US, demonstrating how good Azure's offering is. The Australian market appears to be some way behind the US and is waiting for a provider to start dominating the market, could it be Azure?

Hills Holdings

Hills Ltd is transitioning from a diversified manufacturer of roofing and clotheslines to a service-based company in the healthcare sector. Hills plans on achieving this by bolt-on acquisitions from which the company can build scale. Hills recently purchased Questek and Merlon; providers of nurse call systems and general health monitoring systems. The companies were significantly smaller than Azure and have inferior offerings (or so I'm led to believe) but are the type of platform that Hills plans on using to grow scale. Azure could well become a takeover target by Hills in time, especially if its US exposure becomes more significant.

Foolish takeaway

Australia has a good history of producing quality healthcare companies. Azure and Hills are addressing the fragmented nurse call system and health monitoring industry in Australia, and Azure offers terrific exposure to the same industry in the US, Asia and Europe. Azure's market cap is still tiny, at just $62 million, and is expected to be much bigger in five years' time, with 25% annual revenue growth not out of the question. These two companies, either individually or as one, could be global players in the future.

The post Will these companies be Australia's next healthcare giants? appeared first on The Motley Fool Australia.

I'm kicking myself for missing the opportunity to invest in Reverse Corp Limited (ASX: REF) because the shares are up over 1,200% in the last year alone. The company's 1800 Reverse service allows those without phone credit to shift the cost of a call to the receiver – at a hefty premium, of course. In emergencies the service is particularly useful, but the company has a number of competitors. Poor management decisions (to invest in secondary businesses) led to a falling share price over a number of years, but the company has clearly turned around its business in the last 6-12 months.

In late September 2013 when I first looked at the company, I noted that Reverse Corp had a market capitalisation of under $5 million, and operating profits of over $1 million. My notes from September highlight the fact that excluding cash, the company traded on a P/E ratio of about 3.5, and that while the management restructure had cost the company in employee entitlements, it would likely boost earnings in 2014.

Looking back on my notes, I can't believe I didn't buy shares in the company: the value was staring me in the face. Apparently, I was expecting profits to drop, not grow, and I thought the loss making businesses that the company owns would do further damage to the bottom line. As it turns out, the company made about double the profit I expected it to, and the share price has tripled. I'm pretty embarrassed I missed that opportunity. I'm not a buyer at current prices (15c per share), but the company could easily boost profits by selling (or liquidating) its underperforming businesses, and I expect the share price to rise further over the next two years.

Another microcap turnaround on my radar is Kip McGrath Education Centres Limited (ASX: KME), a franchisor of private tutoring centres. There are three main reasons Kip McGrath was in trouble. First, the strong Australian dollar reduced the value of the revenue streams from overseas. Second, the former business model – exclusively face-to-face tutoring without adequate support for franchisees – was, to quote the Chairman "losing relevance in today's tutoring market." Third, the company bought a college education business that generated losses and subsequently failed to gain re-accreditation resulting in wasted time, wasted salary expenses, and some hefty write downs.

That's in the past now, and if management has learned from their mistakes, the company could have a much brighter future. It has certainly improved its online capabilities and has moved to an apparently superior revenue sharing model with franchisees. The new cloud-based software (which allows students to complete parts of the program at home) is expected to improve student retention. Of the 550-odd franchisee centres, over half are already using the new software and 94 have moved to the new full service franchise revenue sharing model. Shares are up 270% in the last year alone.

However, Kip McGrath is a speculative investment because it has only just started growing its profits (again). If revenue growth continues, operating leverage should mean that profits rise very quickly, at least for a few halves. The company will suffer if the Australian dollar continues to strengthen and benefit if it falls. In any event, my investment thesis depends on cloud computing keeping costs down as the company expands its network, and this is far from guaranteed.

Another promising microcap is Azure Healthcare Ltd (ASX: AZV), which sells monitoring hardware and software to hospitals. The company's mission is to make it easier for nurses and other healthcare professionals to monitor patients in hospitals. Since I wrote this article, the share price is up about 10%, but the increasing demands placed on healthcare systems should create demand for Azure's products because they improve efficiency.

As with Kip McGrath Education Centres, the thesis for investing in Azure Healthcare relies on operating leverage. Operating leverage is most significant when a company is just becoming profitable: it arises when revenue increases without an equally significant increase in costs, meaning a higher proportion of that revenue falls to the bottom line. For example, Azure Healthcare's revenue increased 43% in the first half of 2014 over the second half of 2013, but profit was up 357%. If profit growth is even a fraction of that over the next few halves, the company stands a strong chance of more than justifying its current share price – which is up 650% in the last 12 months.

Foolish takeaway

Microcaps such as Azure Healthcare, Kip McGrath Education and Reverse Corp are illiquid stocks, suitable only for patient long-term investors. I prefer Azure Healthcare and Kip McGrath Education over Reverse Corp because I think they are widening their business moats and focusing on the core business. I therefore expect that they will become safer investments over time. Reverse Corp should do well if it strengthens its key brands and divests from its unsuccessful businesses, though growth may be hard to come by.

All three companies are recovering from poor decisions made in the past, although Azure Healthcare and Reverse Corp have substantially renewed management teams. Looking past the terribly ill fated acquisition, Kip McGrath appears to be making the right moves to improve the business. Company founders often make great leaders, so it's pleasing to see that each of these three companies retains a founder on the board of directors.

The post Beat the big fund managers with these 3 rocketing microcaps appeared first on The Motley Fool Australia.