Based on current prices and the projections from Morgans, these small-cap companies could rise roughly 60%. 

While ASX small caps come with increased volatility, there can also be increased upside.

Here are two that could be worth monitoring.

Eureka Group Holdings Ltd (ASX: EGH)

Eureka Group Holdings provides rental accommodation for seniors and disability pensioners in safe and well-managed environments.

Year to date, its share price has risen 10.4%.

The company recently released H1 FY26 results.

According to Morgans, the small cap's reaffirmed FY26 guidance will see EBITDA grow 20% to 25% (vs pcp) and underlying EPS grow 7.5% to 10%.

This is a result of a 5% to 7% same-store rent growth and full earnings contributions from the $80m of assets acquired since CY25. 

In EGH we see sector leading earnings growth, Government backed revenues, and attractive valuation (trading at NTA). The return outlook, relative to risk, remains attractive as the secure income stream and valuation discount mitigates some of the risks, whilst the modest market cap means acquisitions can materially improve earnings.

Based on this guidance, the broker maintained its buy recommendation and $0.85 price target.

Yesterday's closing price of $0.53 indicates a 60% upside. 

Betr Entertainment Ltd (ASX: BBT)

The company provides sports and race betting services in Australia. Its main product lines include sports, horse racing, greyhound racing, harness racing, and on-track wagering.

It is aiming to expand its services into the US market as more US states change their legislation to permit legal access to online wagering services.

In 2026, its stock price has risen by approximately 16.6%.

It also reported 1H FY26 results during February. 

Following the results, the team at Morgans said the interim result was impacted by an unusually unfavourable trading period for bookmakers, particularly across racing during the peak Spring Carnival. 

While 2Q26 margins were heavily affected by customer-friendly outcomes, trading has normalised since December, and the business enters 2H26 with improved operating leverage following the completion of its major brand and marketing investment phase. Notwithstanding recent earnings pressure, we believe the company's 2H26 and FY27 guidance is achievable, supported by normalising gross margins, improved promotional efficiency and a more disciplined cost base.

As a result, the broker reduced earnings forecasts across FY26 to 27F. 

It has maintained a buy recommendation and lowered its price target to $0.40. 

Despite lowering its target price, there remains approximately 63% upside based on yesterday's closing price of $0.245. 

The post Two exciting small caps with buy recommendations from Morgans appeared first on The Motley Fool Australia.

Eureka is a business focused on providing quality and affordable rental accommodation for independent seniors and disability pensioners within a comfortable community environment. There are no entry or exit fees.

It has more than 50 villages across six states, with more than 2,800 units owned or managed across Australia.

There are a few reasons why I think the ASX small-cap stock is a bargain. Let's get into it.

Rising earnings

The business notes that more than 95% of Eureka's senior residents receive government support payments, which are indexed biannually by at least the rate of CPI inflation.

Eureka also recently expanded into all-aged rental communities, and it can use its experience in the over-50s market to succeed in this area. The company notes that many regional communities have very limited rental accommodation available. 'Ingoing yields' are reportedly between 8% and 10%, and the targeted five-year internal rate of return (IRR) is more than 15%.

The ASX small-cap stock pointed out that demand for rental accommodation remains very high, driven by strong levels of immigration and overseas students, an ageing population, housing affordability concerns, and limited supply. Across Australia, the vacancy rate for residential accommodation was 1.2% as at 30 September 2024. Eureka says that a 3% vacancy rate is considered a 'balanced' market.

In the FY25 first-half result, the business reported revenue growth of 11%, driven by strong resident demand, rental growth, and acquisitions. I expect the business will continue to make acquisitions to help drive earnings in the coming years. HY25 operating profit (EBITDA) grew 16% to $8.2 million, while underlying profit before tax increased 25% to $5.4 million.

RBA rate cuts to help the ASX small-cap stock?

As a property-focused business, I believe the recent RBA rate cuts and potential future ones could help drive the underlying value of the ASX small-cap stock.

The business can also benefit from a reduction in the cost of debt, which would boost the company's operating profits.

Some economists think the RBA could cut interest rates by a further three or four times over the next 12 months. I think that would be very supportive for the ASX small-cap stock.

Rising dividend

While it doesn't have a huge dividend yield, the business is in a good position to continue paying larger dividends to investors.

The ASX small-cap stock has increased its annual dividend each year since 2019, which is not something that many companies can say.

The last two dividend payments amount to a dividend yield of 2.5%. But, I'm expecting plenty more dividend growth from investors in the coming years.

The post Why I think this ASX small-cap stock is a bargain at 58 cents appeared first on The Motley Fool Australia.

Of course, it probably takes more than one investment to make $1 million, and I wouldn't put my whole portfolio in a single stock.

Nonetheless, if Eureka's growth plans are successful, the business could become significantly larger in the coming years.

The business has a growing portfolio of seniors and all-age rental communities. It's highly weighted to the fast-growing Queensland market. It had 53 villages as at 31 December 2024.

Let's get into why I think the ASX retirement stock has such a promising future at this valuation.

Solid tailwinds

The business says that demand for rental accommodation remains "very high", driven by "strong levels of immigration and overseas students, an ageing population, housing affordability concerns and limited supply".

According to Eureka, new supply is limited by the cost of construction, chronic shortages of trades, a lack of access to development funding, and the availability of suitable land.

The ASX retirement stock currently has an occupancy rate of 97%, and it's expecting same-unit rental growth of between 5% and 7% in FY25. In Australia, average rents increased by 7.2% over the 12 months to 31 August 2024. The company also noted that the pension increased by 4.1% in the six months to September 2024.

Eureka points out that there are limited independent community living options for seniors on the age pension, and the number of Australians aged 65 or older is expected to grow by 28% to 5.8 million by 2031.

The business said it has an acquisition pipeline that's under contract or assessment of more than $100 million. It expects to make further investments in the all-age affordable rental market in the coming months.

For example, this week, the business announced the $8.25 million acquisition of its second all-age rental village in Central Coast, NSW. It has 65 long-term rental sites and seven short-term campsites. Eureka believes this will provide highly predictable rental income with low ongoing maintenance requirements. It has a rental yield of 8.6% with "significant earnings upside".

Improving financials

It will take time for the long-term trends to play out, but the business is clearly already benefiting.

In the result for the six months to 31 December 2024, revenue increased 11% to $22.6 million thanks to strong resident demand, rental growth, and acquisitions. This helped underlying operating profit (EBITDA) grow 16% to $8.2 million, and underlying profit before tax grew 25% to $5.4 million. This helped fund a 4.3% increase in the dividend to 0.73 cents per share.

Impressively, the business has grown its annual dividend each year since it started paying one in 2019.

The business said its guidance of "fully deployed" underlying EPS growth of at least 19% in FY24 remains unchanged.

Appealing valuation

In its recent FY25 half-year presentation, the ASX retirement stock said it's trading with a compelling rental yield and potential for "significant valuation upside".

The business said its FY24 capitalisation rate (which is essentially a rental yield compared to its valuation) was 8.17%. Keeping in mind the current property valuations are amid high interest rates, it has net tangible assets (NTA) per share of 53.3 cents (which was 8% higher than FY24). Considering the share price is trading at a similar level as its underlying value, this could be a good time to invest.

The post Could this be a millionaire-maker ASX retirement stock at 55 cents? appeared first on The Motley Fool Australia.

Writing in its October 2022 monthly report, the 1851 Emerging Companies Fund says it has seen "some of the largest daily movements in our index for many years".

"In over 15 years of investing in the Australian small-cap sector, we have never seen the fast-changing macroeconomic environment driving share price moves like we are witnessing as opposed to underlying company fundamentals."

Managed by small-cap veteran Chris Stott, since inception in February 2020 the 1851 Emerging Companies Fund has returned 12.8% per annum, soundly outperforming its benchmark.

October saw the fund rise 4.4% after fees compared to its benchmark's rise of 6.5%

Contributors to performance included the XRF Scientific Limited (ASX: XRF) share price jumping 24% higher for the month after the manufacturer of equipment and chemicals largely for the mining sector reported a "strong trading period across all divisions, driven by activity in the mining sector and buoyant demand for capital equipment products".

On the flip side, the Eureka Group Holdings Ltd (ASX: EGH) share price fell 14% in October after the owner and manager of senior independent living communities announced a $28m capital raise at $0.47 to fund the purchase of two new villages. The company also announced they are in due diligence with over $20m worth of further potential acquisitions. 

In early November, 1851 Capital lodged a notice of initial substantial holder with the ASX, declaring it held 5.06% voting power in Eureka Group. 

The fund's five largest positions are listed as Capitol Health Ltd (ASX: CAJ), PSC Insurance Group Ltd (ASX: PSI), PeopleIn Ltd (ASX: PPE), OFX Group Ltd (ASX: OFX) and Ridley Corporation Ltd (ASX: RIC).

The OFX Group share price continued its upward trajectory into November after the foreign exchange services company reported a strong performance for the first half of FY23, including upgrading its profit guidance for the full year. In what has been a tough year for many payment companies, OFX Group shares have been a standout, gaining 57% over the past 12 months.

1851 Capital expects inflation to peak this coming quarter, saying the impact of the recent east coast rain will likely drive food prices higher once again. Despite the recent hikes in interest rates, the fund says economic activity continues to remain robust with no major slowdown evident.

"We continue researching for companies to position for an inevitable economic recovery over the medium term," concluded the fund.

The post Top fund manager has 'never seen' ASX share price moves like we are witnessing appeared first on The Motley Fool Australia.

It runs a portfolio of high-conviction names. In the latest monthly update, the LIC only had seven positions in its portfolio which it views as long-term holdings.

The LIC is fresh from generating a portfolio performance of a 58.4% return over FY21 and it is still confident about these three ASX shares which just reported during reporting season:

BSA Limited (ASX: BSA)

BSA is a technical services contracting company.

The fund manager said that BSA produced a result consistent with what it has seen for a number years. It was a "credible" underlying result, particularly in the current conditions, but there were a number of one-off costs.

Naos noted that there was commentary about laying the foundations for the future. Underlying margins at the small cap ASX share also increased in FY21, so the fund manager believes that commentary is correct.

Naos was disappointed by the lack of substantial comments about capital management and a lack of tangible progress regarding acquisitions. The fund manager believes that BSA has a sound foundation to build on which "could lead to significant compounding returns for shareholders over time". It is hoped by the fund manager that the potential will start to be realised in FY22.

COG Financial Services Ltd (ASX: COG)

COG, a financial services provider, revealed a result that showed underlying net profit (NPATA) rose by over 132%. Naos noted that the result had increased transparency compared to previous years along with "excellent" cash generation. The fund manager attributed the cashflow generation to COG's capital light, distribution-focused business model.

Naos pointed out that the result allowed the small cap ASX share to grow its dividend by 295%. The dividend payout ratio was 62%.

The fund manager was also pleased that more transparency was also provided about its insurance broking strategy which is now starting to be implemented. The company has stated its ambitions to grow this to 50% of the earnings of the finance broking and aggregation division. Naos said if that can achieved, then the fund manager believes the insurance broking business could potentially contribute $15 million of earnings before interest, tax, depreciation and amortisation (EBITDA) in five years' time.

Eureka Group Holdings Ltd (ASX: EGH)

Eureka was a provider of affordable rental accommodation for independent seniors within a community environment.

Naos said that that Eureka's result confirmed the momentum that the business has building over the last two years. Underlying EBITDA was up around 22% and all key metrics like occupancy levels remain robust.

There was a slight negative that Naos pointed to from the small cap ASX share – there wasn't greater detail revealed on its capital management strategy that would enable the business to scale significantly in the future.

The fund manager thinks that Eureka can become a much larger business but it may not need to own 100% of all of its assets on its own balance sheet. Naos points out there Greg Paramor is on the board, who has a lot of experience at Folkestone and more recently Charter Hall Group (ASX: CHC), he could help the business launch a funds management model which is a strategy Naos believes could be very beneficial for Eureka shareholders over the longer-term.

The post 3 top small cap ASX shares this fund manager likes appeared first on The Motley Fool Australia.

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part two of our interview with NAOS Asset Management portfolio manager Robert Miller, he presents 3 ASX shares that currently have beautiful prospects.

Hottest ASX shares

The Motley Fool: What are the 2 most attractive ASX shares right now?

Robert Miller: First one I'll talk about is Eureka Group Holdings Ltd (ASX: EGH). They are a provider of independent seniors living. So it's not aged care. 

If you think about people that are of senior age and they want to live in the community still, this is a way to live in a rental community that certainly doesn't have any aged care factor involved in it. It's simply a rental agreement. 

The vast majority, 95%-ish, of Eureka's revenue actually comes from government pension funds — in terms of rental assistance.

Eureka's got a portfolio of about 2,500 units across 40 villages that they own and manage. Strong management team and board. The key here is the aging population tailwind is very significant — only going to be a bigger factor for the economy over time. 

But also equally the flip side of that is as you get more people moving into retirement age, there are less people in the age of their working career, as in producing income for the economy. So therefore you get that natural switch between people that are generating income to… the government needing to provide more stimulus and whatnot over time.

Add to that housing affordability, which is a topic, and certainly one that you're seeing less home ownership percentages over time. That plays into Eureka's long-term [benefit] in terms of the tailwinds that they operate in. 

It's a very large market and we see them as providing a social infrastructure good that [has] a significant demand. 

What I would also say is I think Eureka's done a good job to date, under the current management and board, of acquiring businesses. There are significant M&A opportunities within this space. But as well as that, they've got a lot of assets where they might have some vacant land, or are able to purchase vacant land as well, and develop that internally.

You possibly could classify it as a boring business, but we believe that's one that's got very strong tailwinds, very stable revenue profile, and a business that can incrementally grow over time, and generate hopefully very strong free cash flow returns.

The Motley Fool: And the other one?

Robert Miller: Another one that is a little bit different, it's probably classified as a turnaround story at this moment, is a business called Gentrack Group Ltd (ASX: GTK), which is an enterprise software business that provides billing and customer support software to utility providers. 

So this business has been around for a few years… It went from $6 to 80 cents. Since that time, a new board [and] new management team have come on into this business. And it's a new strategy under the current management team who've been there for approximately 12 months now.

The reason for mentioning it today is they've put out an outline of a 3-year strategy at the end of their investor day in June. They're not starting from scratch on this turnaround. So they've got a very sticky product, and we believe by not starting from scratch, you're able to reinvest in technology and transition the business to becoming a cloud-first business with your existing customers first, before you have to go out and win new customers.

Despite the long-term tailwinds around energy businesses and utilities looking for a lower cost to serve and also more complexity around a transition to a green energy world, … there are short-term headwinds for this business. 

Quite a few of the [management team] have come out of a business called Amdocs Limited (NASDAQ: DOX), which is a US-listed business that does a lot of utility and customer billing software. I think roughly it's like a US$10 billion NASDAQ business. … There's a lot of pedigree out of that business.

So it's a big market. And I think if they're successful in turning around this business with their existing customer base and then grow it from there, and they want to be best of breed at what they do, the earnings profile could be significant in terms of the upside there.

They've got another small division, which is an airport software division. So the utilities division I've touched on, is by far the majority. But they do have an airport software business as well, which is providing some mission-critical software into some of the largest airports in the world, including Sydney Airport Holdings Pty Ltd (ASX: SYD), and JFK, around say things like passenger tracking.

Yes, this is at a cyclical low, but they've got some tier-one airport customers. We think there's quite a bit of inherent value in this airport software as well. Hopefully, it can be realised in time.

The keeper

The Motley Fool: If the market closed tomorrow for 5 years, which stock would you want to hold?

Robert Miller: A key principle of ours is long-term investing. So we almost always think about, when investing, for periods of 5-plus years. So this is perfect, and I could probably answer this with a few across the portfolio.

In saying that, I certainly will pick something within our investment universe. Objective Corporation Limited (ASX: OCL) — I don't know how familiar you are with that one, but it's an enterprise software business again. This one's for regulated industries, such as local councils, state councils, federal [government], whatnot. What they provide is software that has tools for governance, content and workflow processes. 

The business was founded by Tony Walls, who founded it over 30 years ago now. He's still the CEO and the major shareholder. He still owns over 65% of the shares on issue. They haven't raised capital since back in 2000.

Clearly, digital transformation is something that all industries are experiencing, but I think probably government and regulated industries have a long way to go on this and probably aren't as nimble as other sectors. So we think there's a long runway for this tailwind to benefit Objective Corp. 

Their software [contributes as] core platforms within their customer base. So their churn rate is very low. A low level of churn is an extremely valuable asset in an enterprise software business.

They expense all their R&D. And that's been the case since listing, and they've invested close to $200 million in their software over that time, all expensed. And they invest a very healthy portion of sales at over 20%. So they are continually reinvesting in the product and the software offering to make it a benefit for their customers, which in turn drives growth, which they in turn reinvest back in the businesses, and it becomes a bit of a perpetual cycle like that.

The other thing to note is they've taken the migration to the cloud successfully. … Objective are the majority of the way through that. I suppose once you've got a high-quality software cloud offering, you get compounding over time. 

Management has been excellent allocators of capital over a long period of time. And we see no reason why this won't continue. So very much if the market closed tomorrow … happy to hold this for that period of time.

Looking back

The Motley Fool: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

Robert Miller: Yeah, there's plenty. Where do I start? Wrong timing, wrong price, missed opportunities — I'd be lying if I said we hadn't had all of those things occur to us. I think regrets and mistakes are part and parcel of being an investor, unfortunately. 

What I would say is being able to learn from your mistakes and also potentially learning from the mistakes of others before they've happened to you, is another key factor. 

I would say the one that can hurt the most are missed opportunities in terms of our experiences. I won't name names, but I feel like over the years, you've probably missed a few businesses that have been run by excellent founders.

So when you miss one that's in your circle of competence that compounds for many, many years, and you can generate 5, 10 times returns, missing them are the ones that probably hurt the most.

The Motley Fool: You don't want to name an obvious clanger?

Robert Miller: No, I really don't, because some of them we've invested in later on. 

But it's just identifying excellent founders and whatnot early on enough so you get that compounding nature of returns for shareholders. I would say that we probably learnt a lot from some of these, and you're never going to get a business that looks exactly the same, run by a founder who looks exactly the same. 

But using our knowledge and experiences, we've been able to invest in quite a few businesses since then, that are run by what we believe to be excellent founders and allocators of capital.

And hopefully in the future, we can identify them early. But obviously you're never going to get them all right.

The post This ASX tech share fell 87%, but we love it now appeared first on The Motley Fool Australia.

What's 1851 Emerging Companies Fund?

It's a fund that invests on small cap companies outside of the S&P/ASX 100 Index (ASX: XTO). The 1851 Capital fund typically invests in 30 to 80 small cap ASX shares to try to beat the S&P/ASX Small Ordinaries Accumulation Index.

1851 Emerging Companies Fund has been a very strong performing fund since inception after it launched just before the COVID-19 crash. Since inception in February 2020, the fund has delivered a net investment performance per annum of 28.6%. That's after all fees and expenses. Over the last year, to 31 March 2021, its net return was 100%.

At the end of March 2021, the five largest positions were Uniti Group Ltd (ASX: UWL), Capitol Health Ltd (ASX: CAJ), Frontier Digital Ventures Ltd (ASX: FDV), PSC Insurance Group Ltd (ASX: PSI) and Pinnacle Investment Management Group Ltd (ASX: PNI).

The fund's net return of 1.1% in March 2021 was able to beat its benchmark's return of 0.8%, partly thanks to these three shares:

Eureka Group Holdings Ltd (ASX: EGH)

The Eureka share price climbed 21% in March 2021. 1851 Capital explained that the business continued its rally after a strong result in February 2021.

In the result, the small cap ASX share reminded investors that its revenue streams are economically stable and highly resilient, with government pensions underpinning around 95% of revenue. It has 97% occupancy.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 27% to $5.23 million, underlying profit before tax grew 39% to $3.57 million and net operating cashflow increased 16% to $4.05 million.  

1851's investment team are impressed with the ASX share's new board and management at the company who have sent an "impressive" platform for growth in the senior independent living sector.

People Infrastructure Ltd (ASX: PPE)

The People Infrastructure share price went up 18% last month. 1851 Capital attributed this rise to the "solid" result and return of the former CEO.

The small cap ASX share saw revenue growth of 3.1% to $201 million and normalised EBITDA rose 49.3% to $21 million. Normalised net profit after tax and before amortisation (NPATA) grew 51.5% to $13.7 million and NPATA per share grew 19% to 14.8 cents.

People Infrastructure is expecting to grow its normalised EBITDA to between $35 million to $37 million in FY21.

The business continues to look at both the opportunity to grow organically into new sectors as well use its acquisitions that would accelerate that growth.

Pentanet Ltd (ASX: 5GG)

Perth-based telecommunications business Pentanet saw its share price increase 20% over the month. 1851 Capital pointed to strong subscriber growth and optimism around the cloud gaming launch.

On 27 January 2021, the small cap ASX share commenced online registrations of interest by allowing future Australian users of GeForce NOW to reserve their usernames and register for an invitation to the beta program.

Since that announcement, over 24,300 gamers have registered. This level surpassed initial business case expectations and provided strong confidence to scale up its initial launch plans.

Pentanet has proceeded with the placement of an initial hardware order with NVIDIA in line with the cloud gaming strategy. It is buying 18 RTX game servers at an approximate capital cost of A$3.2 million. The aim is to roll out the beta offering this year, with a commercial to launch after that.

The post 3 top ASX small cap shares that delivered for this fund's portfolio appeared first on The Motley Fool Australia.

What is Naos Asset Management's investment approach?

Naos is led by chief investment officer (CIO) Sebastian Evans. NAOS Ex-50 Opportunities Company Ltd (ASX: NAC) is one of the listed investment companies (LIC) operated by Naos.

That particular LIC generally looks at businesses with market capitalisations between $250 million and $6 billion. That's what Naos deems to be a 'mid-cap'.

The fund manager has a number of investment focuses. It looks for businesses that are good value with long term growth potential. With its portfolio, Naos believes it's better to have a quality portfolio rather than numerous holdings. That's why it only holds around 10 positions in each fund, with each ASX share representing a high-conviction position.

Naos invests in the small cap ASX shares and mid caps for the long-term. It considers the performance and the liquidity of its positions whilst ignoring the index. Performance can sometimes be quite variable when compared to the index.

It looks to invest purely in industrial companies whilst also considering the ESG factors (environmental, social and governance).

Here are three ASX shares worth owning, according to Naos:

Objective Corporation Limited (ASX: OCL)

Naos describes Objective Corporation as a business that's founder led and provides specialist software for regulated industries such as government, councils and financial services. The fundie says that Objective has mission critical software, built on providing improved governance, service delivery and workflow-process efficiency.

The fund manager says Objective Corporation is a global leader in the space, with over 1,000 customers and 10 product offerings across many countries.

The ASX share held its annual general meeting recently and released a detailed presentation. Whilst there were no new comments provided, Naos thought there were a few interesting comments that supported the view of long-term growth of the business. One comment related to FY21 guidance being reiterated for "material growth in revenue and profitability". Another comment was about how acquisitions remain a core part of the strategy. Finally, more detail was provided about how the integration of iTree, together with the recent product launches of Gov365 and Objective Build is progressing.

Naos said that with annualised recurring revenue (ARR) now standing at $53 million, the fundie believes the ASX share is on target to achieve, or even exceed, the long term ARR ambition of more than $127 million.

Eureka Group Holdings Ltd (ASX: EGH)

According to Naos, Eureka Group is a provider of quality and affordable rental accommodation for independent seniors within a community environment. Eureka owns 30 villages and manages a further nine villages with a total of more than 2,000 places across Queensland, Tasmania, South Australia, Victoria and New South Wales.

Eureka recently held its annual general meeting (AGM) and the ASX share gave a market update in early November which included FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance of $9.8 million to $10.2 million. This equates to growth of 21% to 26% compared to the prior corresponding period. Occupancy has remained above 95% and the business still wants to sell non-core assets, which will provide the funding for organic growth and acquisition opportunities that Eureka is targeting.

The fund manager believes Eureka has multiple levers that can be pulled to help earnings growth at a significant rate going forward, and when overlaid with the current industry tailwinds, Naos thinks Eureka will be highly attractive to investors, particularly in this low interest environment as investors seek returns.

Experience Co Ltd (ASX: EXP)

Experience Co is a business that is one of the largest adventure tourism businesses with experiences like tandem skydiving, indigenous experiences and tours to the Great Barrier Reef. The company currently has numerous locations throughout Australia and New Zealand.

Naos said that with many of the domestic state borders being opened, or expected to be opened in the near future, Experience Co will have a strong tailwind from this leading into the key summer holiday season.

The Australian operations are currently operating at between 30% to 40% capacity compared to the prior corresponding period. Naos believes there is significant earnings potential from greater domestic demand which may lead to greater profit leverage. The fund manager thinks Experience Co will emerge with a much more efficient business, lower costs and a greatly reduced commission model to third party sellers which may result in EBITDA being significantly higher than the results it generated under the previous management's strategy.

The post 3 ASX shares rated as buys by fundie appeared first on The Motley Fool Australia.

What is Naos Asset Management's investment approach?

Naos is led by chief investment officer (CIO) Sebastian Evans. NAOS Small Cap Opportunities Company Ltd (ASX: NSC) is one of the listed investment companies (LIC) operated by Naos.

That particular LIC looks at businesses with market capitalisations between $100 million and $1 billion.

The fund manager has a number of investment focuses. It looks for businesses that are good value with long term growth potential. With its portfolio, Naos believes it's better to have a quality portfolio rather than numerous holdings. That's why it only holds around 10 positions in each fund, with each ASX share representing a high-conviction position.

Naos invests in the small cap ASX shares for the long-term. It considers the performance and the liquidity of its positions whilst ignoring the index. Performance can sometimes be quite variable when compared to the index.

It looks to invest purely in industrial companies whilst also considering the ESG factors (environmental, social and governance).

Eureka Group Holdings Ltd (ASX: EGH)

Naos says that Eureka Group is a provider of quality and affordable rental accommodation for independent seniors within a community environment. Eureka owns 30 villages and manages a further nine villages with a total of 2,147 across Queensland, Tasmania, South Australia, Victoria and New South Wales.

The ASX small cap share recently held its annual general meeting (AGM) and gave a market update in early November which included FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance of $9.8 million to $10.2 million. This would be an increase of 21% to 26% compared to the prior corresponding period. Occupancy has remained above 95% and the business continues to sell non-core assets, which will provide the funding for organic growth and acquisition opportunities.

The fund manager believes Eureka has multiple levers that can be pulled to help earnings growth at a significant rate going forward, and when overlaid with the current industry tailwinds, Naos thinks Eureka will be highly attractive to investors, particularly in this low interest environment.

COG Financial Services Ltd (ASX: COG)

The financing business also held its AGM and gave an update about its strategy going forward. It's still focused on its broking and aggregation business, particularly the insurance broking, as COG brokers have a close relationship with clients and have the ability to meet their financing needs.

The ASX small cap share also provided disclosure about the software that allows COG brokers to have real time data on their entire client base together with real-time quoting and application functionality. Naos believes this is key for COG as some of the brokers it owns may have 10,000 active SME clients that will have a number of financing and insurance needs in any given year.

Naos also thinks that a merger with Earlypay Ltd (ASX: EPY) – formerly CML Group – would also be beneficial if done at the right time.

Big River Industries Ltd (ASX: BRI)

This is a business that's a diversified manufacturer and distributor of timber and building products. It sells softwood and hardwood formply and structural plywood products, consumable formwork products and it's a national merchant of timber and associated building products to local trade, medium sized and enterprise sized companies.

Naos pointed out that Big River Industries was recently successful in applying for a $10 million grant for recovering from the bushfires. The grant will allow the ASX small cap share to close the manufacturing facility in Wagga Wagga and move this capability into the newer facility in Grafton.

The fund manager likes this because it will reduce the exposure to more commodity-type manufactured goods and allow the company to continue to focus on the distribution model with a focus on higher value products. The closure in the site could lead to a significant reduction in working capital and potential upside from land sale proceeds.

The post 3 little-known small cap ASX shares rated as buys by fundie appeared first on The Motley Fool Australia.

What is Naos Asset Management's investment approach?

Naos is led by chief investment officer (CIO) Sebastian Evans. NAOS Small Cap Opportunities Company Ltd (ASX: NSC) is one of the listed investment companies (LIC) operated by Naos.

That particular LIC looks at businesses with market capitalisations between $100 million and $1 billion.

The fund manager has a number of investment focuses. It looks for businesses that are good value with long term growth potential. With its portfolio, Naos believes it's better to have a quality portfolio rather than numerous holdings. That's why it only holds around 10 positions in each fund, with each ASX share representing a high-conviction position.

Naos invests in the small cap ASX shares for the long-term. It considers the performance and the liquidity of its positions whilst ignoring the index. Performance can sometimes be quite variable when compared to the index.

It looks to invest purely in industrial companies whilst also considering the ESG factors (environmental, social and governance).

What are some of the small cap ASX shares that it thinks are opportunities?

In its latest monthly update for 31 October 2020, Naos gave the latest commentary for some of its small cap ASX share positions:

Eureka Group Holdings Ltd (ASX: EGH)

Naos says that Eureka Group is a provider of quality and affordable rental accommodation for independent seniors within a community environment. Eureka owns 30 villages and manages a further nine villages with a total of 2,147 across Queensland, Tasmania, South Australia, Victoria and New South Wales.

Eureka recently completed the acquisition of two affordable rental seniors accommodation villages – one is in Cairns and the other is in Hervey Bay. The acquisition price was a total of $13 million.

Naos believes that, in a world of record low interest rates together with a highly fragmented industry, the asset portfolio that the small cap ASX share owns will command a significantly reduced cap rate and therefore have the capability to increase the net tangible assets (NTA) going forward. Eureka may not need to issue more shares to fund its bolt-on acquisitions as it can continue to sell non-core assets. Naos also thinks there are other ways for Eureka to build scale in what remains a very attractive asset class for certain investors.

MNF Group Ltd (ASX: MNF)

Naos describes MNF as a founder led software company, which specialises in proprietary digital network infrastructure for voice communications.

The fund manager says that MNF provides voice carriage and value-added software services to some of the world's largest software companies and wants to expand into the APAC region.

Naos noted that MNF recently provided FY21 earnings before interest, tax, depreciation and amortisation (EBITDA) guidance of $40 million to $43 million, with the mid-point implying year on year growth of 8.6%. The wholesale business continues to perform well, with volumes remaining elevated and is expected by Naos to remain so during the rest of FY21.  

The new Singapore network will launch commercially in March for the small cap ASX share but is not expected to benefit the FY21 earnings profile, though customers are already being brought on board.

However, headwinds continue for its audio-conferencing business and volume has been lost on minutes trading because of the reduction of international roaming.

Naos believes that a significant amount of shareholder value can be realised if the direct and wholesale divisions are split either through a divestment or demerger by the small cap ASX share.

The post 2 little-known ASX small cap shares rated as buys by fundie appeared first on The Motley Fool Australia.

During early afternoon trade, shares in the property asset company are up 1.3% to 38.5 cents.

Let's take a closer look at what was said in its annual address to shareholders.

Key highlights

During FY20, Eureka completed a number of significant milestones while progressing through its transformation process. This included the acquisition of Liberty Vilas, a 124-unit village in Bundaberg, Queensland, and the disposal of its Terranora units.

Year-end occupancy rates grew to 95% compared to 91% in 2019, and solar energy enhancements were made in 13 villages.

The company reported a net profit after tax of $8.1 million compared to the $6.7 million achieved in 2019.

Underlying earnings before interest tax and depreciation (EBITDA) came to $8.7 million, up 11% on the prior corresponding period.

Net operating cash flow stood at $7.6 million, up 60% although this included a one-off GST refund of $0.6 million.

Net debt jumped to $52 million, however the group's gearing remained at an acceptable level, with a margin of 37.7%. To allow room for further acquisitions, Eureka expanded its debt facility from $60 million to $77.5 million.

The board pleasingly introduced a dividend reinvestment plan that will commence in 2021.

Outlook for FY21

Due to the continued momentum during the first four months of the 2021 financial year, Eureka updated its FY21 outlook.

Operating results have been encouraging with EBITDA, and net profit after tax is ahead of budget and the prior year. Eureka expects to maintain trading to be consistent with current results.

Forecasted underlying EBITDA for FY21 is estimated to be in the range of $9.8 million and $10.2 million. This excludes asset revaluations, sales at Terranora and any unforeseen expenses.

Implementation of an integrated technology system is a key priority for Eureka as it looks to provide real time reporting and analysis.

In addition, the company will focus on growth in the area of offering accommodation to independent seniors. Eureka noted that not only would this improve cash flows, but also operate its assets on a low risk social infrastructure framework.

Eureka share price summary

The Eureka share price has made a strong turnaround from reaching its 52-week low of 26 cents. Trading at relatively the same levels as the beginning of the year, the company is a whisker away from reaching a multi-year high of 40.5 cents.

Eureka has a current market capitalisation of $89.7 million and a price-to-earning (P/E) ratio of 11.4.

The post Eureka (ASX:EGH) share price climbs higher on AGM update appeared first on The Motley Fool Australia.

What does Eureka do?

Eureka is a property asset manager of senior independent living communities in Australia. The group focuses on flexible guest and care services with 30 owned villages and 9 villages under management representing 2,015 units.

The company, headquartered on the Gold Coast, is committed to providing quality and affordable rental accommodation for seniors and disability pensioners in safe and well managed environments.

What's driving the Eureka share price?

The Eureka share price increased following the company's release of strong end of year results. Particular highlights included net profit after tax (NPAT) up 19% to a total of $8.1 million. Adding to this result was the revaluation of properties net gain of $1.80 million. This included a $1.09 million boost from the company's Tasmanian village portfolio. As a result, Eureka's earnings before interest, taxes, depreciation and amortisation (EBITDA) was also up 24% to $12.2 million.

In terms of the property manager's inventory, Eureka made a gain of $1.03 million on the sale of some of its Terranora units. This is ongoing with 31 units yet to be sold. Eureka also experienced an uplift in its joint venture investments.

The company's cash flows were strong once again. Net cash from operating activities strengthened due to improved occupancy, new village acquisition and a GST refund. The new village acquisition was a 124-unit village in Bundaberg, Queensland. This was funded as a result of the sale of the Terranora units and debt drawdown. Eureka's debt facility was increased from $55 million to $60 million to partly fund the acquisition. At balance date, the undrawn amount under the facility was $5.53 million. 

Dividend

A final dividend of 0.55 cents per share, amounting to $1.27 million, has been declared. The financial effect of this dividend has not been brought to account in the financial statements for FY 2020 and will be recognised in subsequent reports. Dividends of $3.57 million were paid out over the year.

Where to now for the Eureka share price?

Looking forward, Eureka aims to further expand its core business of providing rental accommodation for independent seniors through the active management of existing assets, the acquisition of additional villages and units, and the realisation of development opportunities, including an expansion of the group's village in Wynnum, QLD. It also aims to improve the performance of the existing portfolio with continued focus on maintaining and improving occupancy.

As a result of the pandemic, Eureka will continue to implement operational efficiency and cost reduction measures as well as streamline support services through process and systems improvements across its villages. However, the company has noted that it is not able to commit to a specific number for its financial outlook at this time.

The post Eureka share price climbs 5% on positive FY 20 results appeared first on The Motley Fool Australia.

I think it's important that we don't fall in traps that could hinder our journey to achieving a comfortable.

Believing these two myths could seriously cost you:

You can't do it

When people think about retirement they might think that reaching $1 million is impossible. Reaching a $1 million retirement fund may not be possible for people that don't have full-time work for most of their life, but for the rest of us it's definitely possible – even if it's just contributions into superannuation.

Just think of this, if you start with $0 and invest $1,000 a month for 25 years into shares that achieve an average return per annum of 10% you would end with almost $1.2 million.

That means a 40 year old, starting at $0, could finish with $1.2 million by 65. A very respectable finish!

Assets will definitely keep returning 10% per annum

However, it may be a mistake to think that shares will keep returning 10% a year. There are two things that make me believe that returns are likely to compound at a much slower rate over the next few decades compared to the last three.

One, interest rates have significantly fallen over the past three decades which have been a slow-and-steady tailwind for share valuations. This isn't going to be repeated, so even if earnings growth is exactly the same into the future there won't be the same capital growth. Interest rates are quite likely to rise at some point so that would be an even bigger hurdle for share returns.

Two, the population is ageing. A higher and higher proportion of the population is going to be leaving the workforce which is likely to cause slower growth for the overall share market. However, there are plenty of shares that could benefit including Lifestyle Communities Limited (ASX: LIC), Eureka Group Holdings Ltd (ASX: EGH), Japara Healthcare Ltd (ASX: JHC), InvoCare Limited (ASX: IVC), Ramsay Health Care Limited (ASX: RHC) and Challenger Ltd (ASX: CGF).

I think that it will mean that people currently saving for eventual retirement will need to save more money during the process themselves because they won't have the same tailwinds of lowering interest rates and economic growth.

Foolish takeaway

Reaching a respectable retirement nest egg is definitely possible, but I think we're going to have to work hard to get there. That's why I'm trying to find the best long-term shares I can for my portfolio.

The post 2 retirement myths that you can't afford to believe appeared first on The Motley Fool Australia.

Some retail shares like JB Hi-Fi Limited (ASX: JBH) have already had a strong performance this year, so I'm not sure we're going to see any more gains there.

So here are three shares that could see a rally:

Webjet Limited (ASX: WEB) 

The travel operator's share price has fallen a lot over the past six months, particularly with the troubles that Thomas Cook was going through, leading to its collapse.

However, the rest of the Webjet's WebBeds business is going very well. Excluding Thomas Cook the total transaction value (TTV) was up 50% in the first 10 weeks of FY20.

Webjet's share price is already making a recovery and I think it could keep going higher as investors realise the longer-term value of Webjet's growth potential at the current price.

Eureka Group Holdings Ltd (ASX: EGH) 

Eureka is the operator of affordable accommodation for seniors and disability pensioners. There are a number of long-term tailwinds for Eureka including a rising ageing population and an increasing percentage of people who don't own their home.

The company is now generating a solid operating profit, it started paying a dividend and is valued 13% lower than its net tangible assets (NTA) at 30 June 2019 with property prices rising.

Bingo Industries Ltd (ASX: BIN) 

The waste management business has had a rollercoaster year after an earnings downgrade but the share price has been rising since then.

However, there are a few factors that are increasing sentiment and longer-term profit. The acquisition of Dial A Dump Industries should prove a clever buy with good synergies, whilst the recovering housing market is leading to higher approval activity which should be good for profit in the longer-term and the share price in the shorter-term.

Foolish takeaway

I think that all three shares have promising prospects of beating the market in the short-to-medium term. If I had to pick one it would be Webjet, its business model is very attractive to me for fast profit growth. But Eureka could continue to rise to next reporting season.

The post 3 ASX shares to buy for a Santa rally appeared first on The Motley Fool Australia.

The company is a provider of aged care services and accommodation, developing and managing several facilities for retirees and pensioners. However, the company was caught up in scandals last year, which saw the share price plunge 59.6%, a forced capital raising, cancellation of the interim dividend and the company's founder leaving.

Estia's major competitors Japara Healthcare Ltd (ASX: JHC) and Regis Healthcare Limited (ASX: REG) also saw their share prices plunge in 2017, with the government flagging cuts to the funding it hands out to aged care providers like Estia. Other flagged changes to government funding and rules regarding how residents pay for their accommodation also weighed on the aged care companies. But investors appear to have forgotten about these issues, pushing Estia's share price up.

Another recently highlighted issue where Aveo Group (ASX: AOG) appeared to be taking advantage of some of its residents could put the whole industry under the microscope – which could see Estia's share price lose all or most of its gains so far this year.

There's no doubt there are substantial tailwinds blowing in the aged care sector, with an ageing population and more demand for aged care services and cheaper government-assisted accommodation. My preference would be to stick to the smaller end of the market with players like Gateway Lifestyle Group (ASX: GTY), Lifestyle Communities Limited (ASX: LIC) and Eureka Group Holdings Ltd (ASX: EGH) as we highlighted here.

The post Why the Estia Health Ltd share price is up 20% so far in 2017 appeared first on The Motley Fool Australia.

We covered the issues earlier this week in more detail here, but Aveo's shares were sold off, with shareholders not impressed.

One of the major issues raised is the exit fee Aveo collects when residents die or leave the village. In some cases, Aveo can make as much as 40% of the property's value according to reports. For the same reason, investors might want to avoid Estia Health Ltd (ASX: EHE), Japara Healthcare Ltd (ASX: JHC) and Regis Healthcare Ltd (ASX: REG)

This controversy could shine a spotlight on the sector, but investors keen to take advantage of the theme of an ageing population could still invest in the aged care/retirement segment through the following companies.

Gateway Lifestyle Group (ASX: GTY)

The company has a market cap of just under $600 million, and is paying a dividend yield of around 4.6% at the current price of $2.00. Gateway is a provider of affordable community living housing for seniors through land lease communities and manufactured home estates. This essentially involves the resident owning their own home with the operator keeping ownership of the land and receiving a rental income stream in return. Any capital gains on selling up are for the resident to keep – there are no exit fees.

Lifestyle Communities Limited (ASX: LIC)

Lifestyle has a market cap of $424 million and is currently paying a minimal dividend yield of 0.7%. But that will likely improve over time as the company requires less capital to reinvest back into the business. Lifestyle does charge an exit fee in the form of a deferred management fee (DMF), similar of Aveo. However, the company says the DMF is 20% of the resale price of the home – not quite as controversial as the 40% Aveo can garner in some instances.

Eureka Group Holdings Ltd (ASX: EGH)

Eureka is the baby of the three, with a market cap of just $81.5 million and 35 villages under management as of March 2017. Eureka is still growing, both organically as well as through acquisitions. As you might expect, the company also doesn't pay a dividend, recycling profits back into future growth. With shares almost halving since early February, now might be the perfect time to take a closer look at Eureka Group.

Foolish takeaway

The above three senior's accommodation providers might be worthy of a closer look for Foolish investors.

The post Could these 3 smaller aged-care operators be a buy? appeared first on The Motley Fool Australia.

Kina Securities Ltd (ASX: KSL) – A$156 million market capitalisation

Kina Securities is a Papua New Guinean ("PNG") bank and wealth manager who's banking business is phenomenally profitable. It is the fourth biggest bank in PNG, the largest wealth manager, one of only two licensed stockbrokers, and has a significant foreign exchange business.

The semi-monopoly that Kina operates should remain reliably profitable for the long term, and has some modest tailwinds including (slowly) growing superannuation balances and the increase in availability of banking services (e.g. mobile banking) to the under-banked country.

However, despite an apparently strong competitive position, Kina's profitability has decreased recently and Net Interest Margins have been in decline over the past two years. The real question is, in my opinion, 'Is Kina cheap enough to justify a further decline in its business and allow for other risks, while providing for sufficient upside if conditions do not decline?'  I don't think the answer to that question is 'Yes' just yet, and you can read more of my thoughts on Kina Securities here.

Eureka Group Holdings Ltd (ASX: EGH) – A$94 million market capitalisation

Eureka Group provides low-cost rental accommodation for pensioners, and receives its funding primarily, indirectly, via government subsidies. The company is on an acquisition spree and has been using debt aggressively to acquire new units and sites. Also, unlike Japara Healthcare Ltd (ASX: JHC) or Estia Health Ltd (ASX: EHE), Eureka is not reliant on the Aged Care Funding Instrument (ACFI), which reduces the near-term possibility of regulatory changes.

Cheap on the face of it, a significant chunk of Eureka Group's profits recently have come from revaluation of its properties, not from rental yields. In my opinion this means that the company's low Price to Earnings (P/E) ratio is somewhat illusory as not all of the profits are 'available', e.g., to pay debt. You also can't count on property revaluations occurring every year, especially since increases in the rental yield are effectively capped by the tenants' financial position.

I liked a lot of what I saw in Eureka's reports, and would be open to owning shares at another time. However for the moment, it looks like a $94 million company with $42 million in debt, that is growing aggressively in a capital-hungry business with a low return on invested capital, and I'm not super keen on that.

The post 2 profitable small-cap shares I investigated recently appeared first on The Motley Fool Australia.

Sure, some are highly speculative – and several could easily end up losing their shareholders all of their current gains.

But when you consider the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) index has returned just 1.7% over the past three years (since October 21, 2013), 1,000% returns – or more than ten times the initial price are truly astonishing.

If you include dividends reinvested over that time, the Index return becomes 16.2% in total – not a great return at all.

Source: S&P Global Markets Intelligence, Google Finance

Some of these companies are in hot sectors, but a number also have some very exciting new technology.

Pilbara Minerals and Neometals are lithium companies benefitting from the surging demand for the product for use in rechargeable batteries – not just in mobile phones but growing electric car manufacturing.

Magnis operates in the equally hot graphite sector – hence its share price soaring.

Structural Monitoring Systems has benefitted from the increased demand for real-time monitoring of the structural integrity in products like airplanes, bridges, pipelines and buildings. The company has first-mover advantage and a huge market, although is still loss-making.

Resapp Health wants to develop smartphone apps to diagnose and manage respiratory disease. While it sounds promising, the company is still undergoing trials for its products. 3 years ago, Resapp was called Narhex Life Sciences and was looking at moving into the resources space.

Agrimin has also transformed – from a company called Global Resources Corporation three years ago, into a potash miner in July 2014. Potash is one of the main ingredients in fertilizer – expected to see almost as much demand in future as lithium.

Cardinal Resources is a gold explorer in Ghana, Africa and investors appear excited by the company's deposits.

Eden Energy is using carbon nanotubes to form a concrete admixture that means concrete doesn't need steel reinforcing added to it. Tests so far suggest Eden's product is far superior to standard concrete in many ways.

Eureka Group has profited by moving into aged care and development and management of retirement villages, and is steadily growing its business with big tailwinds behind it.

Egg and egg products supplier Farm Pride has had a strong couple of years thanks to consistent growing profits – mostly by substantially reducing its production costs.

Dacian Gold has profited from the recovery in the gold price of the past few years as well as progressing its 100% owned Mount Morgans Gold Project.

Red River benefitted from the demise of Kagara Ltd, picking up the Thalanga zinc operations from the administrator for just $6.5 million in July 2014. The company is working to restart operations within the next 12 months.

Foolish takeaway

It seems clear that each of the companies listed above have exciting developments on the go. Whether they will all be successful is another questions though and not easily answered. My three tips for a closer look would Eden Energy, Farm Pride and Eureka Group.

The post These 12 stocks have seen gains of more than 1,000% in the past 3 years appeared first on The Motley Fool Australia.

The dramas surrounding Estia Health Ltd (ASX: EHE), Japara Healthcare Ltd (ASX: JHC) and Regis Healthcare Ltd (ASX: REG) has seen their share prices tumble 64%, 41% and 31% respectively so far this year.

The main impact is cuts to the Aged Care Funding Instrument (ACFI) – with the government concerned that funding to the sector is not leading to the right outcomes. In other words, better care for our elderly, more places and a host of other benefits.

We've written about this before, but it seems the incentives to provide aged care have been abused by some – not unlike the incentives provided to the vocational education sector, and to other parts of the economy where the government provides funding including pathology, diagnostic imaging and general healthcare.

But there are two companies providing products and services for older Australians that could be worthy of adding to your watchlist.

Eureka Group Holdings Ltd (ASX: EGH)

Eureka provides low-cost rental accommodation and services to retirees who are reliant on the government pension and rent assistance. The company owns 25 retirement villages with 34 villages under management and has partnered with not-for-profit company Blue Care to offer in-home care packages to residents. Eureka is growing primarily through acquisition and expects to add 8-12 villages in the next 12 months. Potential investors need to be aware that Eureka has substantial forward tax losses, which means current profits are inflated by not having to pay any tax.

Lifestyle Communities Limited (ASX: LIC)

Lifestyle Communities operates slightly differently, offering working, semi-retired and retired people over the age of 50 accommodation. Residents in the company's 11 villages own their own home and lease the land from the company. Lifestyle currently has 2,445 home sites under management or development across 13 sites – with 6 sold out, 4 under construction and another 3 in development. The company has a strong pipeline of homes for sale and yet to be settled and expects "a material increase in profit in FY2017", after reporting a net profit of $20.6 million in FY2016. At the current share price of $3.94, Lifestyle is trading on a trailing P/E of 19.9x, but may be worthy of further research.

The post 2 quality companies in the aged care sector appeared first on The Motley Fool Australia.

However, these four companies didn't fare as well, falling much further than the market.

Eureka Group Holdings Ltd (ASX: EGH) saw its share price sink 6.4% to 73.5 cents, despite no news from the company. Eureka provides accommodation villages for senior Australians and recently purchased its 25th freehold village in Broken Hill, NSW. The company has acquired a number of retirement villages since 2014 and turned them into cheap accommodation for older Australians (not just retirees). Perhaps investors were switching into the aged care providers today as their shares went for a strong run.

Slater & Gordon Limited (ASX: SGH) saw its share price lose 4.3% to sink to 44.5 cents and a market cap of just $139 million. The shares have now lost half their value since the start of this year, although shares did jump around 10% yesterday. As we noted, it's probably not a wise idea to read anything into today's move as the share price for the troubled law firm is highly volatile.

Infigen Energy Ltd (ASX: IFN) fell 4.1% to 94.5 cents, but as we noted earlier today, the share price is up strongly so far this year (302%) as we wrote this morning. The wind farm and renewable energy company has sold off assets, cut its debt and reported strong growth in earnings. Today's fall may well just be some investors taking profits – despite the company forecasting a strong 2017 financial year ahead.

Cash Converters International Ltd (ASX: CCV) fell 6.2% to 30.5 cents, and the share price has now lost 35% in the past month. The pawnbroker and personal finance company faces a class action from borrowers for charging excessive fees and interest between 2009 and 2013 and that is obviously hanging over the company's head. The company is also in the process of restructuring its UK business and unprofitable – hence investors dislike for the company.

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