In morning trade, the ASX tech share was up 25% to 20 cents before being paused from trade.

Why is this ASX tech share rocketing?

The catalyst for this strong gain was news that the risk management technologies company has signed a major agreement with Telstra Group Ltd (ASX: TLS).

According to the release, AVA Risk has signed a Telstra Supply Agreement (TSA) that it believes establishes a substantial opportunity within the large and globally addressable telecommunications vertical.

Management notes that TSA is the culmination of 10 months of collaboration, including product trials with Telstra and its customers.

Those trials demonstrated the superior ability of its sensing technology to be deployed to Telstra's existing fibre network to detect events and provide appropriate classification and reporting. It notes that this provides a rich source of data to Telstra, and effectively turns the existing fibre network into sensors.

The ASX tech share believes it is a clear demonstration of the adaptability of the company's technology to adjacent applications, such as telecommunications, which opens significant new markets to the company.

Management has described it as a "significant milestone" for the company. Ava Risk CEO, Mal Maginnis, commented:

Signing a preferred supplier agreement with Telstra is a very significant milestone for Ava Risk Group. It underscores the strength of our market-leading solutions and is testament to our commitment to innovation to meet the evolving needs of our global client base. It clearly demonstrates that our sensing technology, which has evolved from security solutions, can be deployed to multiple applications. This collaboration cements our position as a trusted supplier, and we look forward to working extensively with Telstra.

With more than 5 billion kilometres of fibre optic cable deployed globally (as at 2022), the agreement with Telstra Group represents the entry into a large and attractive market vertical for Ava Risk Group's technology.

Earlier this week, Maginnis vested 333,333 AVA Risk shares.

The post This tiny ASX tech share is leaping 25% after striking a deal with Telstra appeared first on The Motley Fool Australia.

AVA says that it intends to return capital to shareholders as previously announced in August 2021. After securing a stockpile of cash, the company has deliberated and come to a decision on how best to reward its shareholders with these funds.

At the time of writing, the AVA share price is trading 3% higher at 41.5 cents apiece as investors respond positively to the company's release.

AVA Risk Group to return capital to shareholders

Investors might recall that back in August last year, AVA announced that it wanted to redistribute 'excess cash' of around $39 million to shareholders.

The proposal to distribute the funds was contingent on receipt of a favourable class ruling from the Australian Tax Office (ATO) regarding the treatment of the funds, to see if they could be treated as capital or not.

AVA notes that the ATO has responded to its class ruling application, indicating that "it would be willing to treat $7.567 million of the proposed $39.2 million as capital in nature".

The board considered all options of how to return the excess funds to shareholders and came to a final investment decision that sees AVA shareholders benefit from the company's good fortune.

After careful consideration, it decided to make two distributions. The first is a special dividend of 13 cents per share, totalling a distribution of approximately $31.585 million.

Whereas the second payment is set to be a capital return of 3.114 cents per share for a sum of around $7.567 million.

On 28 February 2022 –the special dividend's record date – investors will receive an unfranked dividend of 13 cents per share, to be paid on 10 March 2022, per the release.

With respect to the details of the capital return, AVA remarked:

The Company will seek shareholder approval to reduce the ordinary share capital of the Company by approximately $7,567,000 and such reduction in capital to be effected by the Company paying to each registered holder of a fully paid ordinary share the amount of $0.03114 per share. Shareholder approval will be sought at an Extraordinary General Meeting on 22 April 2022. Further details relating to Capital Return, Record Date and timetable will be provided within a Notice of Meeting which will be issued to shareholders in the near future.

AVA Risk Group share price snapshot

In the last 12 months, the AVA share price has faltered over 32%, however has spiked almost 3% since trading recommenced this year.

The post Payday! Here's why the Ava Risk (ASX:AVA) share price is surging higher today appeared first on The Motley Fool Australia.

The index has lost more than 2.8% in the past month, but on Thursday it had a massive gain of almost 1.6%.

Where is the market going? Nobody knows.

If you're bewildered about what to do next, some expert opinions might get you started.

This week 2 experts picked out 2 ASX shares each that they thought were ripe for buying right now.

Judge for yourself whether these 4 suggestions tempt you:

Special dividends and buybacks on the cards for Telstra

Ord Minnett senior investment adviser Tony Paterno is high on Australia's largest telco, Telstra Corporation Ltd (ASX: TLS).

"Management is targeting mid single-digit growth in underlying operating earnings to fiscal year 2025," he told TheBull.com.au.

"It expects increasing earnings to be driven by mobile service revenue growth, improving consumer and small business fixed margins and further cost reductions."

Telstra shares have already gained more than 30% this year. But Paterno is excited about more returns forthcoming to shareholders.

"Expect fully franked dividends to remain at a minimum of 16 cents a share," he said.

"Telstra plans to return any excess cash flow to shareholders – in the absence of merger and acquisition opportunities – via an unfranked special dividend, or further on-market share buybacks."

Aussie Aussie Aussie…

Telstra's considerably smaller rival, Aussie Broadband Ltd (ASX: ABB), is the other ASX share on Paterno's current hit list.

The internet service provider's stock price has risen a stunning 141% this year.

Paterno explained that management has taken advantage, recently raising $114 million through institutional investors and currently conducting a share purchase plan for retail shareholders.

"The war chest of capital is intended to fund one or more acquisitions and to accelerate the company's ambitions in the business market," he said.

"The company has signed a 10-year fibre capacity swap agreement with VicTrack in Victoria. VicTrack's fibre network will provide ABB with a shortcut to a wider distribution footprint in regional Victoria without deploying incremental capital."

Both a COVID beneficiary and post-pandemic growth contender

One of Spotee.com.au chief executive Chris Batchelor's tips is education technology provider Janison Education Group Ltd (ASX: JAN).

"It provides online assessments and e-learning solutions," he said.

"It recently acquired the global rights to 2 exams administered by schools to provide standardised testing across school-aged students."

Janison shares have had a nice run, increasing 146% over the past 12 months to leave it with a market capitalisation of $230 million.

But Batchelor is optimistic there's more to come.

"In our view, Janison is poised to generate significant growth in the years ahead. It also benefits from the pandemic, as education providers require technology-based solutions."

How about an ASX share that'll give you 33% of your money back 

Security services and technology provider Ava Risk Group Ltd (ASX: AVA) was Batchelor's other buy recommendation.

"The company announced the sale of its services business and a capital return to shareholders of 16 cents a share."

Based on the share price of 48 cents after market close on Thursday, that's a 33% return for these ASX shares.

Batchelor disclosed that he personally owns Ava Risk stock.

"The existing technology business was recently trading on an undemanding price-earnings multiple of about 11 times," he said.

"Revenue and other income grew significantly in fiscal year 2021, despite the pandemic. The company's valuation multiples look attractive."

The post 4 ASX shares looking ripe for the picking now appeared first on The Motley Fool Australia.

At the time of writing, the risk management technology company's shares are up 14% to 51.5 cents.

Ava Risk share price jumps after more than doubling its profits

• Revenue increased 41% to $65 million
• Earnings before interest, tax, depreciation and amortisation (EBITDA) up 116% to $16 million
• Net profit after tax jumped 178% to $13.75 million
• Net operating cash flow rose 195% to $17.6 million
• Capital Return of $39.2 million (or ~16 cents per share) and $1 million on-market buy back

What happened in FY 2021 for Ava Risk?

For the 12 months ended 30 June, Ava Risk reported a 41% increase in revenue to $65 million. This was driven by a 61% jump in Services revenue to $40.34 million and a 17% lift in Technology revenue to $24.7 million.

In respect to its Services revenue, management advised that this increase reflects the expansion of its Ava Global Logistics customer base and the capture of a greater share of existing client spend. Whereas its Technology business benefited from an increase in licensing fees from the Indian MOD project.

Supporting its strong profit growth was an improvement in its margins. Management advised that its gross margin improved despite a greater mix of revenues coming from the lower margin Services business. This was thanks to the Technology business improving its gross margin over the previous year.

Furthermore, its operating expenses only increased 7.8% year on year to $16.32 million, leading to operating leverage. This ultimately supported a 178% jump in net profit after tax to $13.75 million.

But perhaps the biggest positive that is supporting the Ava Risk share price is the announcement of a major capital return.

Earlier this month the company signed an agreement to offoad its Services business. This is expected to leave the company with $40.2 million in excess capital, which will soon be returned to shareholders.

An approximate $39.2 million (or ~16 cents per share) capital return has been proposed and will be voted on at its annual general meeting. In addition, a $1 million on-market buy back will be undertaken.

Based on the current Ava Risk share price, the capital return equates to a 31% yield.

What did management say?

Ava Risk's CEO, Rob Broomfield, commented: "Since acquiring MaxSec Group in December 2017, Ava Risk Group has been delivering consistent growth and moved into profitability over the past two years. We are really pleased with the crystallisation of value achieved from the Services Division, Ava Global, and the strong net cash return from the divestment – 587% over five years. We are also seeing strong returns from the Technology Division, both in top line growth and operational efficiencies, which is providing us with the capability to execute on future growth initiatives."

"Looking ahead, we are optimistic about our technology businesses – FFT and BQT – which together reported FY2021 revenue of $24.7 million and EBITDA of $8.3 million, up 17% and 64%, respectively. The increased momentum noted in the fourth quarter has continued into the current quarter, and new orders are building on the $4.3 million of FY2021 backlog. In addition to these new orders, we have already received over half of the $1.5 million of contracts expected in FY2021 but delayed."

What's next for Ava Risk in FY 2022?

Positively, management notes that it has a very strong pipeline of sales opportunities in existing markets, and a growing pipeline in new markets. This includes in its mining conveyor solution Aura IQ.

As result, it appears confident of further growth in the Technology business in FY 2022.

Mr Broomfield commented: "Importantly, we are looking beyond FY2022 to fulfil our vision of being a global leader in actionable, intelligent data streams that protect and optimise critical assets – by leveraging our partnerships, growing recurring revenue and leveraging our scalable model. We have a great team behind us, a strong network of partners, an exceptional customer base and ended the year in a robust financial position."

The Ava Risk share price is still down 12.5% year to date despite today's strong gain.

The post Ava Risk (ASX:AVA) share price jumps 14% on strong FY21 profit growth & capital return appeared first on The Motley Fool Australia.

At the time of writing, Ava Risk shares are up 10.47% to 47.5 cents. In comparison, the All Ordinaries Index (ASX: XAO) is down 0.48% to 7,811 points.

What did Ava Risk announce?

In today's release, Ava Risk advised it has entered into a sales and purchase agreement with TTG Bidco Limited.

Under the deal, Ava Risk will divest its non-core Services Division, Ava Global DMCC-LLC, for US$46.4 million. The net cash proceeds are estimated to be US$31.1 million after closing adjustments, payment of management incentives, and accrued bonuses.

The transaction is being targeted for completion during October 2021.

Following the divestment, Ava Risk stated it will focus on its core business divisions. These are Future Fibre Technologies, which handles fibre optic sensing solutions, and BQT Solutions, a provider of high-security card and biometric services.

What did management say?

Ava Risk Group CE, Rob Broomfield commented:

We are pleased to crystallise our return on investment from Ava Global by implementing this Transaction.

From a peak funding investment of US$5.3 million, Ava Risk Group will have received more than US$36.4 million (A$49.6 million) in cash from our Services Division, a net cash return of some 587% over approximately five years. The sale will allow management to fully focus on the Technology Division, growing recurring revenue and expanding into new markets and applications.

An update of our growth strategy and policies around surplus cash will be provided when we report FY2021 results on 30th August.

About the Ava Risk share price

Over the last 12 months, Ava Risk shares have catapulted by more than 75%, but are down around 20% year-to-date. The company's share price reached a multi-year high of 78.5 cents in December 2020 before treading lower ever since.

On valuation grounds, Ava Risk presides a market capitalisation of about $110 million, with approximately 242 million shares outstanding.

The post Why the Ava Risk (ASX:AVA) share price is soaring 10% today appeared first on The Motley Fool Australia.

At the time of writing, shares in the risk management services and technologies company are up 2.9% to 52.5 cents.

Ava Risk's latest contract

Investors are pushing the Ava Risk share price higher following the company's latest contract win.

In this morning's release, Ava Risk announced it has secured a $1.84 million deal to deploy its Aura Ai sensing solution to a number of major rail facilities in South America.

Aura Ai-2, developed by Future Fibre Technologies (FFT), is an advanced and versatile perimeter intrusion detection system. The product platform applies artificial intelligence to detect and locate intruders who climb, cut or lift perimeter fences.

The company's Aura Ai sensing product will be installed across a multi-site program to upgrade security systems. This will be completed by fully-integrating the package with the customer's existing video management software and CCTV system.

Ava Risk noted that its first purchase order has already been received, valued at $0.61 million. The initial rollout is scheduled for early Q4 FY21, with the remaining sites completed before the end of the quarter.

Word from the manager

Ava group CEO Rob Broomfield welcomed the deal, saying:

FFT Aura Ai-2 was the solution selected to protect the rail sites, due to our exceptional event classification capability, extended sensing distance, and cut resilience capability.

A further key factor in the contract win was FFT's previous success in protecting railway infrastructure and the company's strong reputation across the broader transportation sector.

Ava Risk share price summary

The Ava Risk share price has jumped to more than 400% over the past 12 months. However, its shares are down around 10% year-to-date.

Based on the current share price, Ava Risk has a market capitalisation of $123.2 million, with 241.6 million shares outstanding.

The post Here's why the Ava Risk (ASX:AVA) share price is edging higher today appeared first on The Motley Fool Australia.

But after opening at 58 cents this morning, shares in the infotech company are right back where they started at market close yesterday, now trading at 56 cents.

Let's take a closer look at the company's results.

How did Ava Risk perform?

In the first half of FY21, Ava Risk saw substantial increases across various key metrics.

The risk management services and technologies provider grew its ordinary activities revenue by 72% to $35.159 million. This was aided by the company's services division which saw revenue increase by $9.243 million.

Moreover, perimeter security and access control contributed an additional $5.470m of sales revenue. Ava Risk reported substantial revenues from its Indian Defence contract and the Australian Department of Defence, despite COVID-19 delays.

The company's sales orders backlog has fallen significantly, down from $16.7 million in HY20 to $3.4 million as of December 31, 2020.

Regarding the company's margin, Ava Risk boasted an improved gross margin of 57%, up from 49% in the prior corresponding quarter (pcp). This was aided by improved margins in the technology division driven by the Indian contract deal.

For the half, operating expenses excluding depreciation, amortisation and interest were $8.637 million. As a result, the company made a net profit of $11.03 million.

As such, Ava Risk holds net assets of $34.075 million with no external debts or borrowings.

About the Ava Risk share price

Ava Risk offers a range of solutions, including intrusion detection for perimeters, pipelines and data networks, biometric and card access control, as well as the secure international logistics and storage of high-value assets. Based in Victoria, the tech company has a market capitalisation of $135 million.

Ava Risk has declared a special dividend of 2 cents per share, to be paid on 10 March.

The Ava Risk Share price has performed well over the last six months, gaining 150%.

The post What's with the Ava Risk (ASX:AVA) share price today? appeared first on The Motley Fool Australia.

This comes despite no new announcements from the company today and an enforced trading halt pending a response to the ASX's 'please explain' price query. 

So why is the Future First share price exploding?

After closing Friday's session at 7.5 cents, the Future First share price surged 60% during early morning trade today to 12 cents. Considering these unusual price and volume fluctuations, the company was hit with a price query by the ASX mid-morning. In response, the company replied that it was unaware of any unannounced information that could be driving the Future First share price higher.

Following the company's response, Future First shares resumed trading and rocketed again to an intraday high of 14.5 cents before retracing back to their current level.

Interestingly, last Friday Ava Risk Group Ltd (ASX: AVA) released news regarding its 'Future Fibre Technologies' division being awarded a substantial multi-base air force contract. Given the similarity in names, this news could possibly be responsible for today's rise in the closely named, but completely unrelated, Future First Technologies shares.

In what could possibly be a case of mistaken identity, there's a chance that the rocketing Future First share price is today stealing some of the kudos surrounding Ava Risk's announcement of last week.

Company snapshot

Future First Technologies is an information, communications and technology (ICT) and digital consulting organisation with over 400 consultants. 

The Future First Technologies share price has fired up more than 200% over the past 12 months. Based on the current share price, the company has a market capitalisation of around $52 million.

The post Is this why the Future First (ASX:FFT) share price is blasting 27% today? appeared first on The Motley Fool Australia.

During mid-morning trade, the Ava share price shot up to an intraday high of 64 cents. However, shares in the risk management services and technologies company have since retraced to 61 cents, up 3.39%.

What did Ava announce?

The Ava share price is firmly in the green today after the company announced a major new contract award.

In its release today, Ava advised that it has successfully completed a comprehensive site acceptance testing using its Aura Ai sensing product. The evaluation and testing program took place at a major airbase within an undisclosed large Asian country.

In addition to the positive news, Ava revealed that it has further secured another contract with the same client. It noted that it has received instructions to deploy its security systems to 15 sites across selected major air force bases.

Ava highlighted that it has purchase orders of more than $0.7 million for multi-site security upgrades at 4 locations. The company stated that deployment at the initial sites is expected to start during the third quarter of FY21. The orders for the remaining 11 sites are anticipated to be undertaken during Q4 FY21 and into FY22.

CEO commentary

Ava Group CEO Rob Broomfield reaffirmed the company's strengths:

Following a comprehensive evaluation and testing program and a competitive tender and trial process, our strong track record of providing world class security and assurance technologies has been reinforced by this large contract award with a highly respected defence end user.

How has the Ava share price performed?

Over the past 12 months, the Ava share price has performed strongly, gaining close to 350%. The company's share registered a multi-year low of 8 cents in March, before storming to a peak of 78.5 cents in December.

The post Here's why the Ava Risk (ASX:AVA) share price is surging today appeared first on The Motley Fool Australia.

What does Ava Risk Group do?

Ava Risk Group (formerly Future Fibre Technologies) is a risk management services and technologies provider. The group features a range of complementary solutions including intrusion detection and location for perimeters, pipelines and data networks, biometrics, card access control and locking as well as secure international logistics, storage of high value assets and risk consultancy services

Ava's clients extend across commercial, industrial, military and government sectors.

Ava Risk Group currently consists of three divisions: Future Fibre Technologies (FFT), BQT Solutions, and AVA Global Logistics.

Ava share price shoots up on strong financial results

Ava reported a FY2020 revenue of $46.1 million, a 46% increase over the previous corresponding period (PCP).

The first-half FY2021 unaudited revenue rocketed up a whopping 70% on PCP coming in at $35 million.

Ava also reported a first-half FY2021 net operating cash flow of $8.2 million. The company has already exceeded its FY2020 total generated cashflow, which was $6 million.

The financial statements further reflect an earnings before interest, tax, depreciation and amortisation (EBITDA) of $12 million. This is a dramatic improvement from the FY2019 EBITDA of negative $4.7 million.

The FFT division's $16.7 million contract with the Indian Ministry of Defence helped boost performance for the period. The contract is for the large scale supply of FFT's SecureLink technology to protect more than 40,000 kms of data communications cables.

Additionally, the Australian Department of Defence ordered $3.4 million worth of encrypted BQT readers during the period. The security devices will be deployed nationally across defence facilities and bases. 

FY21 growth strategy and outlook

Ava's growth strategy is to address increasing global security concerns by driving increasing demand and rapid adoption of the company's high security technologies. 

The company stated that it plans to invest and continue to grow profitable sales and service channels globally.

Ava's preliminary cash at bank total to help support funding growth activities was $13.4 million dollars as at 31 December 2020.

Ava claims to have a strong pipeline of projects coming up. The company believes that attractive industry fundamentals presently underpin future growth.

The Ava Risk share price has gone up more than 274% over the past 12-month period.

The post Here's why the Ava Risk (ASX:AVA) share price shot up 11% today appeared first on The Motley Fool Australia.

It's a welcome move for Ava Risk shareholders to be sure. The company's shares saw a massive spike in 2020, rising from around 16 cents at the start of the year to a high of 78 cents in December. Until today, Ava Risk was down almost 6% from those highs.

So what does Ava Risk Group do? And why is the Ava share price rocketing back up today?

Ava Risk: An intro

Ava Risk Group describes itself as "a market leader of risk management services and technologies, trusted by some of the most security-conscious commercial, industrial, military and government clients in the world".

The company offers "a range of comprehensive solutions" for its clients. These include intrusion detection and location for perimeters, pipelines and data networks, biometrics, card access control and locking as well as secure international logistics, storage of high-value assets and risk consultancy services.

Ava Risk was founded in 1994 and listed on the ASX before the turn of the century. Today, the company has offices or operations across 6 continents. It has also, however, been unable to reach the heights that we saw back in 2015 (when the company was trading at almost $1.20 a share).

However, the company was still making waves in 2020. Back in July, Ava Risk rocketed more than 45% in one day on an earnings report. In this report, Ava told investors that its cash balance had rocketed by $4.1 million to $7.88 million for the quarter ending 30 June 2020. It also reported that it had received a loan from the US government of $333,000 as part of the US government's COVID-19 stimulus packages. The company also reported that it expects this loan to be forgiven (which I'm sure its shareholders appreciated).

Why is Ava Risk rocketing again today?

Once again, Ava Risk appears to be shooting higher today due to the results of another favourable earnings report. This, the company disclosed to the markets this morning just before lunchtime. The report covered the first half of FY2021.

In this earnings report, Ava Risk told investors that revenues had increased by approximately 70% compared with the prior corresponding period to "be in excess of $35 million for the period". This enabled earnings before interest, tax, depreciation and amortisation (EBITDA) to explode by 450% to more than $12 million.

It also reported that "all business units" were profitable over the 6-month period, which helped Ava increase its cash holdings to $13.4 million.

Pleasingly for investors, the company also reported that it expects its gross margins to be around 24% in its services sector, which Ava notes is "considerably above" the 25% margin that FY2020 saw.

The company also noted that a new services contract in the "wholesale banknote sector" has been awarded, which is set to commence this month. This contract is expected to bring in more than $1 million in revenues per annum.

Ava Risk Group CEO, Rob Broomfield, had this to say on these numbers:

Our record H1 FY2021 results have demonstrated that our streamlined and highly scalable cost structure, along with our diverse customer base and revenue streams, are able to show continued growth even in times as disruptive as the current global pandemic period.

The post ASX stock of the day: AVA Risk Group (ASX:AVA) share price rockets 30% appeared first on The Motley Fool Australia.

What's moving the Ava share price?

Investors have been driving up the Ava Risk Group share price this week after the company reported a massive 73% surge in revenue compared to this time last year.

In a statement issued by the company on Monday this week, Ava CEO, Rob Broomfield, said: 

Our strong Q1 FY2021 results have demonstrated that our streamlined and highly scalable cost structure, along with our diverse customer base and revenue streams, are able to show continued growth even in times as disruptive as the current COVID-19 period.

High level results 

It's important to note that these results are currently 'unaudited', however some highlights from the reporting included:

• Sales revenue increased by 73%, compared to the same period last year, to $17 million.
• Earnings before interest, tax, depreciation and amortisation (EBITDA) improved by 522% compared to the same period last year and is sitting at $7.7 million.
• Cash as at the end of Q1 2020 increased by 50% from the previous quarter, with balances sitting at $11.6 million.

Both the company's services and technology divisions contributed to these results.

Services division

Ava's services division recorded revenue of $8.1 million and EBITDA of $1.6 million.

The company noted that the revenue had begun to normalise due to reduced restriction on air travel leading out of COVID-19. However, it also reported that this didn't overshadow the strong underlying revenue trend in general. Essentially, the company is saying that a global recovery is certainly helping but it shouldn't detract from Ava's overall success as a business.

Further news in the services division saw the announcement of a new general manager for Asia, who will be based in Singapore. The company also hinted that further key appointments could be expected to be announced in Q2 FY2021. On the topic of key roles, Ava also stated that its management incentive scheme, which was due to expire in February 2021, had now been extended to the end of FY2021.

Technology division

The technology division recorded revenue of $8.9 million and EBITDA of $6.1 million.

Ava reported that the technology division had continued to operate amidst the coronavirus crisis. Although general restrictions were in place, the tech division was able to continue delivering services to both current and new customers, including some deliveries for major defence programs. 

One major project highlighted in this latest report was the large-scale data network protection program for the Indian Ministry of Defence. This alone resulted in a contribution of $3.6 million in revenue for the quarter.

Some other highlights from the technology division included:

• Strong commercial interest in a new conveyor health monitoring solution called 'Aura IQ'.
• Increasing activity with the assurance sensing solutions. This relates to terrestrial and sub-sea power cables and roads infrastructure.
• First shipment of Ava's latest FOSS (free and open-source software) platform with machine learning software.

The FOSS platform is the completion of the first step in Ava's 'roadmap of innovative solutions' with the goal being to move to a software-as-a-service (SaaS) revenue mode. 

About Ava Risk Group

Ava Risk Group is a leading provider of risk management services and technologies. It services clients in the commercial, industrial, military and government sectors.

This company delivers solutions that are high tech and complex. It helps clients tackle risk management threats to perimeters, pipelines and data networks. Using bio metrics, card access control and locking, as well as secure international logistics, storage of high value assets and risk consultancy services, Ava delivers a diverse range of solutions. 

The Ava share price has increased 287.5% in year-to-date trading and has soared more than 416% since this time last year.

The post Why the Ava Risk Group (ASX:AVA) share price has rocketed 41% so far this week appeared first on The Motley Fool Australia.

Firstly, they offer some potentially higher speculative returns. Secondly, they don't always move with the main market, such as the S&P/ASX 200 Index (ASX: XJO). This can sometimes be a blessing in disguise.

The ASX 200 Index is looking a little flat right now. So, while it decides which direction it wants to move in, take a look at these two cheap small caps that are showing potential.

2 cheap small cap stocks to consider buying

BSA Limited (ASX: BSA)

About BSA

BSA Limited is a technical services organisation. It provides solutions to help clients implement the physical assets in the areas of building services, infrastructure and telecommunications. BSA runs its business and services through three main divisions – BSA Build, BSA Connect and BSA Maintain.

Additionally, BSA provides consulting services through its BSA Think arm. Consulting helps clients realise solutions by enabling them to tap into a knowledge and innovative ideas database in the following areas:

• Asset management
• Design and building information modelling (BIM)
• Energy management and sustainability
• Cost planning
• Project management
• Compliance and certification

BSA has a market cap of around $116 million. 

Opportunity

The BSA share price is currently selling for 27 cents at the time of writing. This is a substantial discount of more than 40% to its September 2019 highs of 46 cents. One thing I noticed about the BSA share price is that it has bounced higher several times before after reaching levels of 23 to 27 cents.

We are currently in that area of value again and, I believe, it's an opportunity to pick up this small cap stock at a great price. A bounce here could see it back at levels higher than 40 cents, resulting in potential returns of 40% or more.

Financially, BSA is in a healthy position with assets exceeding liabilities. Consider BSA as one of the cheap small cap stocks for your portfolio.

Ava Risk Group Ltd (ASX: AVA)

About Ava

Ava Risk Group is a leading provider of risk management services and technologies. It services clients in the commercial, industrial, military and government sectors.

This company delivers solutions that are high tech and complex. It helps clients tackle risk management threats to perimeters, pipelines and data networks. Using bio metrics, card access control and locking, as well as secure international logistics, storage of high value assets and risk consultancy services, Ava delivers a suit of solutions. 

A point to note about Ava is that it actually has a group of companies with specialist skills under its brand:

• Future Fibre Technologies – a fibre optic, intrusion detection and location system specialist.
• BQT Solutions – a security card, bio metric reader and electromagnetic lock developer, manufacturer and supplier.
• Ava Global Logistics – a risk management specialist firm targeting the international logistics market.

Ava has a market cap of around $73 million. 

Opportunity

The Ava share price had been largely sitting in the range of 10 to 20 cents for around three years. In 2020 however, the Ava Risk Group share price has risen more than 100% to currently trade at 33 cents at the time of writing. Interestingly, the last time the Ava share price tried to break past the 30 to 36 cents range in 2016, it failed and fell back down to lows of around 15 cents. So we now have another opportunity to try and break past this resistance level. Breaking up and above 36 cents could see the share price attempt to revisit the previous lofty heights of more than $1.00 it saw in 2015.

Financially, Ava is in a healthy position with assets exceeding liabilities. 

Foolish takeaway

Cheap, small cap stocks can sometimes bring a world of trouble with them. These companies are often new or struggling financially.

The difference with these two companies is that they are financially healthy with asset bases exceeding their liabilities. Additionally, they have established businesses and client bases.

Buying small caps is no different to buying larger companies in that investors still need to do the appropriate research before jumping in. However, investors do need to be aware that smaller companies can often be more volatile than large caps. But having a small amount of exposure to cheap small caps in your portfolio can prove very rewarding if they perform well.

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What was in the announcement?

Ava Risk Group announced that it had positive operating cash flow of $4 million for the quarter to 30 June 2020. The company's cash balance increased to $7,878,000 from $3,742,000 at the end of the previous quarter.

The announcement stated: "Our strategies for delivering profitable growth and generating positive cashflow produced an increase of $4.1 million in net cash holdings as at 30 June 2020, reflective of a growth in revenues, customer cash collections and positive EBITDA performance."

Ava announced that it had shipped 800 units as part of its IMOD contract for Future Fibre Technology's data network security technology. The company has already recognised $5.0 million from this contract in the 2020 financial year with the remaining balance of around $10 million to be received in financial year 2021.

Ava received a loan from the US Government of $333,000 as part of its coronavirus support measures in the 2020 financial year. It expects this loan to be forgiven, which will result in a $333,000 improvement to the company's income in the first half of the 2021 financial year.

Operating expenditure in the final quarter of the 2020 financial year was $11.7 million with product and manufacturing costs of $7.6 million, staff costs of $2.9 million, together with administration and corporate costs of $900,000.

The company paid $203,000 to its directors during the final quarter of the 2020 financial year.

About the Ava Risk Group share price

Ava Risk Group is a technology company that provides risk management services and technologies to commercial, government, military and industrial clients around the world. Its solutions include intrusion detection, electronic access control, data networks, secure international logistics and storage of high value assets. Ava's team is spread across 6 continents and according to the company, protects thousands of sites.

Ava Risk Group shares are up 225% since their 52-week low of 8 cents and have returned 62.5% since the beginning of the year. The Ava Risk Group share price is up 85.71% since this time last year.

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While that was disappointing, at least it wasn't as bad as the falls these four companies saw…

Copper miner Tiger Resources Limited (ASX: TGS) saw its share price hammered down 32% to 2.5 cents, after posting a 32% fall in revenues and a loss of $37.3 million for the 2016 financial year. I've previously written about the company's woes, and it wouldn't surprise me to see the company head out of the ASX backwards. Buyer beware.

Future Fibre Technologies Ltd (ASX: FFT) saw its share price smashed down 21.9% to 25 cents, after the company reported a loss of $5.8 million for the 2016 financial year as revenues declined 21% compared to the previous year. It was a weak second half result that saw revenues fall, despite a strong first half result. It was a surprise to many investors that the downturn in the oil price has affected the company's revenues so badly – hence the weak result and today's sell-off.

Slater & Gordon Limited (ASX: SGH) saw its share price sink 13.1% to 36.5 cents and has now lost 26% over the past 5 business days. That came after the company reported a net loss of more than $1 billion. As we noted in our article, the law firm's shares don't appear cheap, particularly with debts of around 4x the market value.

Wellard Ltd (ASX: WLD) saw its share price sink 15.8% to 24 cents, although I note that Butt Nominees Pty Ltd increased its holding to 26.4 million shares or 6.6% of the company today from 20 million shares previously. The meat processor and exporter reported a pro forma net profit of $14.8 million for the 2016 financial year yesterday – well below its prospectus forecast of $46.4 million – not a great start to the company's ASX life.

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While it is capable of generating huge returns for investors over time, the market is also known for its volatile – and even gut-wrenching – performances, which can unnerve even the most experienced investors, from time to time.

Peter Lynch famously said, "In this business, if you're good, you're right six times out of ten." While we're all prone to a losing investment every now and then, some can be far more painful than others.

Consider these 10 shares, which have all collapsed in price since the beginning of the year:

Data provided by S&P Global Market Intelligence

Topping the list is 1-Page Ltd, a company that is striving to revolutionise the way in which companies hire and promote new talent.

It's a solid concept and the company's customer base is made up of some of the world's biggest companies, but the group still has very low revenue and cash flows from operations. Although it does have plenty of cash on the balance sheet, investors are becoming impatient and may be starting to doubt the company's prospects (I sold my shares recently, although I do intend to keep an eye on the business in case of improvements).

Surfstitch Group has also been an incredibly disappointing investment for shareholders, plagued by several earnings downgrades and the loss of its CEO and, more recently, its chairman as well.

Other big-name businesses that many investors will have been hurt by include Virgin Australia and Slater & Gordon, together with 3P Learning.

Indeed, there are some names on this list that investors could easily have avoided. I myself owned a small parcel of 1-Page shares as a speculative bet, although hindsight tells me I should have at least waited for more positive revenue generation from the business before pulling the trigger.

Other bets, including 3P Learning, would have been more difficult to avoid. The company was showing some nice growth figures, although that quickly changed following an earnings downgrade and the shock resignation of its CEO.

There are a few lessons to take away from this list of non-performers. Firstly, it is imperative that you diversify your portfolio. If a company makes up, say, 1% or 2% of your entire portfolio (as 1-Page did with me), a hefty loss on that one stock won't cause too much damage to your overall wealth, compared to a situation in which an individual holding made up 40% or 50% of your wealth.

It's also important to do your own due diligence on all companies you're interested in owning, and ensure you're aware of both the risks and the opportunities. If you're not comfortable with the risks, it may be worth looking elsewhere to park your funds.

The post These are the 10 worst-performing shares on the ASX in 2016 appeared first on The Motley Fool Australia.

Resource stocks dominated the risers, a number of which outperformed the index:

WHITEHAVEN COAL LIMITED (ASX: WHC) rose 8% to $0.74, taking the company's gains to more than 100% from a low of $0.35 in February. Whitehaven has regained a lot of ground partly as a result of rising metallurgical and thermal coal prices in recent weeks, as well as some bargain hunting from fund managers. Whitehaven does remain vulnerable to movements in the value of coal, which depends on the metrics of supply and demand, but management has done a great job trimming costs in recent times.

Whitehaven shares are down 52% in the past 12 months.

AWE Limited (ASX: AWE), like LNG below, gained 5% to $0.67 on the back of a lift in natural gas prices overnight. AWE shares are up more than 50% in the past few weeks, despite the removal of the company from the ASX200 index as a result of its plunging market capitalisation, which was caused by weak oil and gas market prices. Recent price rises also defy a significant loss posted by AWE in the most recent period of $63 million, up from a loss of $14 million in the prior period.

AWE shares are down 45% in the past 12 months.

Liquefied Natural Gas Ltd (ASX: LNG) lifted 4% to $0.62 thanks to rising gas prices, although shares have traded flat over the past three months or so without any catalysts to move the share price around. Project approvals and a port lease extension, combined with an $80 million loss after tax on no revenues weren't likely to get shareholders excited, and so it has proved. LNG appears to be treading water and biding its time as a result of its struggles to sign binding off-take agreements for its flagship Magnolia LNG project.

Liquefied Natural Gas shares are down 81% in the past 12 months.

Future Fibre Technologies Ltd (ASX: FFT) leapt 13% to $0.90 as a result of bargain hunting following the stock hitting a 52-week low and its inclusion in the All Ordinaries index. Future Fibre recently delivered a solid report to the market with a 55% increase in revenue, and this from Chief Executive Rob Broomfield: "With a substantial project pipeline of potential sales opportunities and a backlog of orders received late in the first-half and due to be shipped in the coming months, FFT expects stronger operating cash flows in 2H2016 from current and anticipated orders." Future Fibre Technologies is a loss-making business, although with $14 million cash in the bank it is well funded to continue operations.

Future Fibre shares are up 8% in the past 12 months.

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The company, with a market value of roughly $120 million, develops and manufactures fence-mounted fibre optic perimeter intrusion detection systems. To put it more simply, Future Fibre Technologies sells advanced security systems that detect and locate perimeter intrusions while they can also protect data network communications cables. It so far has hundreds of installations in at least 55 countries around the world.

While Future Fibre Technologies' products have typically been employed by some of the most security conscious customers out there, including military and government organisations as well as those in the oil and gas industries, it's possible that those products could soon become more widely used.

As an example, the company announced just yesterday it had secured perimeter security contracts totalling over $2 million for major Middle Eastern international airports.

This followed another recent announcement highlighting an FFT technology upgrade at an international airport in Europe with a perimeter of more than 3 kilometres. It said: "During upgrade testing, our technology detected an intrusion on the perimeter fence. Cameras were automatically directed to monitor the situation while security was dispatched to intercept the intruder. It was a great opportunity to see our technology in action."

MCG Security Fencing

Indeed, security has become a huge issue these days. Just look at the tragic events that played out in Paris recently, not to mention the various other attacks across Africa and the Middle East, to name just a few places.

Closer to home, the Australian Football League (AFL) has even announced the famous Melbourne Cricket Ground, or the MCG, will be fenced off to patrons who "will have to undergo bag checks and metal detection" as part of a new security overhaul to be introduced this summer. Cars entering the MCG car-park will also be searched while car parking will be pushed further back from the stadium, helping to reduce the threat of any potential attacks.

At this point, the measures are only precautionary and will be in place for the Boxing Day Test and the Big Bash League fixtures (amongst various other events), while the Melbourne Cricket Club is also in discussions with the AFL regarding security arrangements in 2016.

Based on the information I've read, these are just ordinary fences and certainly don't appear to be anything like Future Fibre Technologies' "fence-mounted fibre optic perimeter intrusion detection systems".

But, at least in my opinion, it does highlight a future for Future Fibre Technologies and its products, especially in the event that attacks around the world do continue to elevate.

Future Fibre Technologies' share price has risen a little over 3% today to $1.02 per share, which compares to a 1.3% rise for the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) benchmark index.

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However, it has also created an enormous threat, as has been highlighted by the numerous hacks on individuals and corporations which threaten not only our privacy, but also our security.

Indeed, The Australian Financial Review this morning highlighted a 'vast, multi-year criminal enterprise' that has hacked at least nine 'big financial and publishing firms' in the United States, stealing information on 100 million of their customers.

For many, that will hardly come as a surprise following the high-profile cyber-attacks on companies like Target in the United States; Sony over its planned release of the controversial movie, The Interview; as well as 'extramarital dating' website Ashley Madison which dominated headlines around the world this year.

These incidents are becoming increasingly common, causing enormous financial and legal costs, reputational damage and service disruption. It also shows just how fragile the internet can be and highlights the desperate need for protection against such incidents.

Indeed, Gartner predicted last year that total information security spending would grow 8.2% in 2015 to reach US$76.9 billion while it believes more than half of organisations will use security services firms by 2018. In other words, there is an enormous opportunity there for a number of companies to capitalise on.

Although many of these companies reside overseas, particularly in the United States, there are a number of Australian businesses that are also well positioned to grow.

Senetas Corporation Limited (ASX: SEN) and Prophecy International Holdings Limited (ASX: PRO) are two such companies.

Senetas provides high-speed data encryption hardware to governments and businesses around the world, designed to protect data travelling between sites rather than just while the data is at rest. The company has also been awarded NATO Certification, providing it with greater recognition amongst customers and better protection from would-be rivals.

Prophecy International, on the other hand, is an international software developer which makes most of its money by selling Snare – a network monitoring tool for which demand has absolutely exploded.

Finally, Future Fibre Technologies Ltd (ASX: FFT) is another company to keep an eye on. It develops and manufactures fence-mounted fibre optic perimeter intrusion detection systems designed to protect important infrastructure such as airports, pipelines and military bases. Protection of data cables is also possible.

Of course, there are risks involved with investing in any of these companies but I expect there could be more growth in store over the coming years.

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