But it's not just everyday retail investors feeling the pinch. The professionals aren't faring much better in a rough market.

One of the most successful funds in recent years, the Cyan C3G Fund, revealed this week that it "suffered badly" in May to see a fall of 14%.

"Performance in May was incredibly frustrating," portfolio managers Dean Fergie and Graeme Carson told clients in a memo.

"All but one of our holdings fell over the month, resulting in the overall poor performance."

Cyan attributed the "severe selling pressure" to a perfect storm of supply constraints, central bank tightening and geopolitical issues.

"In the six weeks to early June, the S&P/ASX Emerging Companies (ASX: XEC) index has fallen 17%." 

Normal programming will return sooner or later

But in the long run, the pair said fortunes would turn around.

"Logistics is improving, supply chains are opening up, costs are still a challenge but will subside as other parts of the supply chain normalise."

A steep hike in interest rates will indeed temporarily result in depressed consumer spending. 

But the portfolio managers reminded clients that even a 150-basis point increase would result in a cash rate that's still historically low.

"In terms of valuing companies on future earnings (which is what the stock market does), it is far from terminal, or perhaps not even particularly material," read the document.

"We feel the market is being overly bearish on where long-term rates might land."

Considering this, the Cyan team named three ASX shares that plunged last month that still have excellent underlying businesses (and it's still holding onto):

Value of brands could exceed the company's current valuation

Brewer Mighty Craft Ltd (ASX: MCL) watched in horror as its share price lost a quarter of its value last month.

It has lost even more in this week's brutal sell-off, to be down 42% since the start of May.

For the Cyan team, this is purely a macroeconomic reaction — because the business is going gangbusters.

"It is currently being valued at $70 million by the market," read the memo. 

"[But] it is expected to deliver more than $70 million in sales during this COVID-impacted year and strong profitable growth in FY23."

The company has a 37% stake in fast-growing brand Better Beer, which is expected to sell 4 million litres this financial year and 10 million in the next.

"On those metrics — at $25 per litre of value (which is the general metric for valuing boutique beer brands that reach scale) — Mighty Craft's ownership of the brand alone could be worth $90 million+."

No debt, profitable, pays dividend

Cyan lost 15% on its Kip McGrath Education Centres Limited (ASX: KME) last month.

Kip McGrath runs an education and tutoring business in the English-speaking markets of Australia, New Zealand, the United States, the United Kingdom and South Africa.

The financials are healthy, according to Fergie and Carson, who noted it has no debt, is cash flow positive, profitable, and pays a dividend. 

The company is also forecast to grow revenue and earnings in excess of 20% next financial year. 

"It is potentially an M&A target and has recently successfully pushed into the US," read the Cyan memo.

"The stock is down 40% from its highs of a few months ago and has delivered no negative news."

'Extremely attractive' takeover target

Fergie and Carson have been fans of micro-investing platform RAIZ Invest Ltd (ASX: RZI) for a while, and a 15% loss in May hasn't changed this view.

This is another ASX share that has no debt and holds $18 million in cash.

"Over the past 12 months, it has grown active customers by 50% to around 650,000, who collectively invest more than $1 billion," read the Cyan memo.

"The company is profitable in its core operations in Australia and is pushing successfully into south-east Asia."

May was just the continuation of a shocking run in 2022. Raiz shares have plunged almost 64% since the start of the year.

Similar to Kip McGrath, Raiz could make an "extremely attractive" takeover target.

"As a comparative valuation, Raiz's US parent Acorns Grow is valued at ~$800 per customer," the memo read.

"Completely ignoring Raiz's 350,000 strong customer base Asia, its Australian business of 290,000 customers is presently being valued by the local market at just $170 per customer."

The post 'Frustrating': Fund backs 3 great ASX shares with plunging prices appeared first on The Motley Fool Australia.

An ABC News article recently shed light on the surging demand for academic tutors. In addition, the article touched on the inadequacy of some academic school curriculums.

Some ASX education shares could be poised to benefit from the surging demand for academic tutors and support services.  

What's fuelling the demand for tutors?

According to the ABC article, the COVID-19 pandemic has revealed glaring holes in Australia's educational system.

With lessons moved online during the height of the pandemic, some parents were confronted by how far behind their children were with schoolwork.

In order to compensate, many parents have turned to tutoring services for additional educational resources. Some tutoring services have doubled the number of children on their books since the pandemic began.

The pandemic has also prompted a review of school curriculums.

The Australian Curriculum Assessment and Reporting Authority announced a review of the national prep to year 10 curriculum in June. The aim of the review is to streamline student workloads and lessons.

Given the weaknesses exposed in the education system, there are some companies listed on the ASX that could potentially help fill in the gaps.

Which ASX education shares could benefit?

3P Learning Ltd (ASX: 3PL) is an online education platform that offers a range of resources covering core subjects such as mathematics, spelling, literacy and science. 3P Learning's platform currently boasts more than 5 million students from more than 17,000 schools around the world.

The company released its FY20 report last month and also revealed a takeover bid from United States-based IXL Learning. For FY20, 3P Learning recorded an 18% decline in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $14.6 million. 

3P Learning cited an increase in sales and marketing expenditure in the Americas region for the lacklustre performance. Despite a weak financial performance, 3P Learning reported promising customer retention in the Asia Pacific, Europe, the Middle East and Africa markets.

Kip McGrath Education Centres Limited (ASX: KME) is another company that could benefit. Kip McGrath provides tutoring to primary and secondary students for a wide range of core subjects. The company operates on a franchise business model with operations in Australia, the UK, South Africa and New Zealand.

Prior to the COVID-19 outbreak,  Kip McGrath provided 36,000 face to face lessons and 550 online lessons on a weekly basis. As a result of global lock-downs and social distancing measures, the company has expanded its online operations. In May, the company recorded a milestone of 20,000 online lessons while face-to-face tutoring dropped to 2,400 per week.

Kip McGrath has identified online tuition as a key market and growth opportunity that offers higher margins than traditional tutoring. As a result, the company completed a $5.9 million capital raise in June to accelerate the growth of its online platforms.

Foolish takeaway

The services provided by 3P Learning and Kip McGrath will not replace traditional teaching formats. However, they could become more popular as an auxiliary service. 

The convenience and high margins of online tutoring could also gain traction as they appeal to both customers and companies alike. The potential in this space has been reflected in the takeover offer for 3P Learning, with IXL's slapping an enterprise value of $166.7 million on the company. 

In my opinion, auxiliary education providers like 3P Learning and Kip McrGath are poised to boom in 2020 and beyond. 

The post Is it time to invest in ASX education shares? appeared first on The Motley Fool Australia.

If, for example, I had crystallised a capital gain of $2,000 by selling my shares in Magical Milk Powders (ASX: MILK) I might have to pay capital gains tax on that profit. However, I might also hold shares in Elite Sport Gizmos (ASX: GIZM) that are showing a $2,000 paper loss.

Facing such a scenario, some investors might be tempted to sell their shares in Elite Sport Gizmos, simply to crystallise that loss. This would act to offset the capital gain they made on Magical Milk Powders earlier in the financial year, thus allowing them to reduce their tax bill. Many would consider that a win.

Now, I am not advocating tax loss selling. I am advocating tax loss buying, because it has paid off for me and my members, in the past. Let me give you two real life examples.

On June 30 2014, I stated my intention to buy Kip McGrath Education Centres Limited (ASX:KME) shares from a motivated seller at around 20 cents. I executed on that plan (at 20.5 cents) and was rewarded with a near 50 per cent gain in a just a few days. You can see how the share price spiked down on June 30, in the chart below. I  hold Kip McGrath shares and am pleased with recent performance.

Another time we spotted that a decent little software company was trading at low prices, despite the fact it looked like it was improving its business (which, admittedly, had struggled.) That is the kind of situation where you often find motivated selling prior to the end of the financial year. So Scott Phillips and I recommended it to Motley Fool Hidden Gems members on the morning of June 30, 2016, in the hope of finding adequate volume at a good price. The method may not have worked as well as it did with Kip McGrath, but it appears to have been a good buy, to this day. We still recommend the company in question and I'm pleased with recent performance.

Tax loss buying is an interesting technique, and I certainly recommend looking into it. However, the draw back is that the chance to do it only comes around once a year. If you're looking for a worthwhile buy today, I suggest you check out these 3 stocks, which come highly recommended by my friend and colleague.

The post One Simple Strategy To Pick Up Small Cap Bargains appeared first on The Motley Fool Australia.

These four stocks fell substantially further however, and here's why:

Kip McGrath Education Centres Limited (ASX: KME) crashed 7.5% to $0.37 on no news and low volume today, probably reflective of the fact that today the sellers were simply more motivated than the buyers. With a market capitalisation of just $17 million and 44 million shares outstanding, investors must be prepared to expect swings in price, as shifts of even a few cents can make a big difference to the value of your investment. Kip McGrath recently disappointed investors with a stiff drop in half-yearly profit, which management attributed to timing differences. The company's overall profit for the year, however, is expected to be at least equal to last year.

Kip McGrath shares are down 4% in the past 12 months.

Bellamy's Australia Ltd (ASX: BAL) lost 7% to $10.13 on fears that a new tax on goods bought from foreign websites could result in a diminished demand for Bellamy's products in its key Chinese market. On the face of it this certainly isn't great news for the company, however Bellamy's tins have recently been selling at substantially higher prices in China as a result of scarcity, and a normalisation of supply could theoretically compensate for the higher tax, resulting in a limited long-term impact on sales. It remains to be seen if Bellamy's has the brand power to simply pass the higher costs onto consumers, but this is also a possibility that should not be overlooked. Fellow China hopeful A2 Milk Company Ltd (Australia) (ASX: A2M) also saw its shares fall 5% today.

Bellamy's shares are up 287% in the past 12 months.

Superloop Ltd (ASX: SLC) lost 3% to $1.86 as investors remain unsure about the company's valuation and long-term potential. At today's prices, shares are trading within inches of their 52-week low of $1.70, and prices appear low enough to make the company worthy of a closer look, despite its weak revenues. Superloop is really just getting started with the establishment of its fibre networks, and I expect future reporting periods to result in a significant uplift in the company's earnings. Positive cash flows could be some way off if the company continues with its ambitious expansion plans, although there could be an opportunity here for patient investors.

Superloop shares are down 8% in the past 12 months.

Premier Investments Limited (ASX: PMV) fell 3.8% to $16.96 today, likely in a bout of profit-taking after the company's strong run in recent weeks – up from $13 at the start of February. Premier's rise was driven by solid results, with all brands reporting growth and like-for-like sales up by 6.9% in a tough global market. Unfortunately, this is fully reflected in the share price and Premier isn't exactly cheap, trading at around 26 times trailing earnings – pretty high for a retailer.

Premier shares are up 34% in the past 12 months.

The post Here's why these 4 shares crashed on the market today appeared first on The Motley Fool Australia.

As part of the services sector education is another clear growth area in theory as the globe's growing middle classes demand better and higher education services, while online learning at schools or private tuition outside schools are other growth areas.

However, investors must be careful to distinguish between businesses in the education sector – as they often have very different profit-making business models.

Some are truly pedagogical in nature and aligned to improving education standards via market leading online products and software, while others rely on regulatory largesse and demand from fee-paying international students to make profits by offering largely administrative services.

Below are two education businesses that have potential to grow quickly via their mission to improve educational standards and two to avoid due to the risks around the 'for profit' education sector and its reliance on third parties and regulators among others.

Two to buy

3P Learning Ltd (ASX: 3PL) is the fast-growing online education and cloud-based business that sells educational products to improve numeracy, spelling and science learning results for 17,000 schools around the world. FY15 EBITDA was $16.9 million with revenue growth of 20% forecast in the year ahead the company's current valuation around $273 million (16x trailing EBITDA) looks attractive for a fast-growing, scalable technology business, with healthy margins and global horizons.

Kip McGrath Education Ltd (ASX: KME) is a private tuition franchisor in the school age space that is growing strongly thanks to its global horizons, technological products, and significant demand for private tuition to improve children's learning. Private tuition is a big growth area within many emerging market countries in particular, where the private tuition space is now beginning to rival the public schooling space size wise. Kip McGrath shares are a speculative bet thanks to its position within the long-term global growth sector of private tuition.

Two to avoid

IDP Education Ltd (ASX: IEL) is a newly-listed business involved in the higher education sector, primarily in operating the International English Language Tests (IELTS). These are the English language tests overseas students commonly take to demonstrate a high level in English language proficiency to qualify for visas and courses, or to meet other legal requirements.

In fact 69% of the group's total revenue of $309.9 million last financial year came from fees in operating the IELTS tests, although the company would not disclose what percentage of this revenue was from students failing and then re-sitting the tests when I queried this with IDP. This looks a business to give a miss as I expect it may disappoint investors in the years ahead.

Navitas Limited (ASX: NVT) is a higher education related business that has disappointed investors on and off since listing back in 2004. It has been impacted by regulatory reforms around university enrolment programs and previously lost a pathway program contract after Macquarie University concluded it was better off assuming full responsibility for its own pathway programs. Shares currently sell for $4.53 and investors will need to be comfortable with the risks around this business.

Foolish takeaway

My main tip for investors in the education space is to identify the businesses with products and services that will make them attractive to customers over the long term due to their pedagogical qualities or educational benefits, rather than those that earn more fees every time a student fails and then re-sits a test like IDP Education for example.

Selling for $1.98, 3P Learning looks an attractive prospect in the small-cap space, while Kip McGrath is an interesting prospect but its speculative nature and illiquidity mean it should only be considered by the most experienced and risk tolerant investors. Needless to say, Navitas and IDP Education are two to avoid in my opinion.

The post 2 shares to buy and 2 to avoid in the next boom sector appeared first on The Motley Fool Australia.

Naturally if most of the below predictions come true in 2016 I will be sure to remind readers at the end of the year, although if they prove idiotic this article will be quietly forgotten as though it were never written.

6 Predictions for 2016

1. Globally focused online education and software providers working to improve education standards in the school age market will pick up steam, with shares in Kip McGrath Education Ltd (ASX: KME) and 3P Learning Ltd (ASX: 3PL) enjoying a strong year.
2. The best Software-as-a-Service (SaaS) businesses will also enjoy a strong year thanks to the scalable business models, high margins, and large global addressable markets. Shares in cloud accounting business XERO FPO NZ (ASX: XRO) will soar higher on evidence it's making genuine inroads into the giant U.S. market.
3. Retail shareholders in National Australia Bank Ltd. (ASX: NAB) will get dudded by management again after their shares in the newly-listed Clydesdale and Yorkshire Bank fall sharply. This after NAB's management palmed off the troubled UK bank to its own retail shareholders in another textbook example of bankers being bankers.
4. The share price of supermarkets business Woolworths Limited (ASX: WOW) finishes 2016 lower than the level it starts the year. This as it fails to reverse a same-store sales slide at its supermarkets, while rival Coles and others continue to steal market share. Woolworths has serious management issues and problems with its Masters business, all of which suggest more downward pressure on earnings and the share price.
5. US equity markets will outperform their European and Australian peers, while investors with exposure to companies making US dollars continue to see outperformance. The healthcare space is one sector, while diversified financials with the twin tailwinds of US equity strength and US dollar exposure may do especially well. Two to climb higher are Macquarie Group Ltd (ASX: MQG) and Magellan Financial Group Ltd (ASX: MFG).
6. Australia's digital economy is set to take off and investors who position their portfolio accordingly for the years ahead will outperform the market. The internet and its global reach gives companies previously unthinkable opportunities to build global businesses at eye-wateringly high margins and returns on invested capital. One to climb higher is REA Group Limited (ASX: REA) as it continues to invest in its growing collection of digital property businesses.

The post 6 predictions for the share market in 2016 appeared first on The Motley Fool Australia.

ResMed impressed the market with its fourth-quarter earnings results late last week. Although its profit was impacted by various one-off factors, sales were bolstered by a strong uptake of its newly launched sleep therapy products, especially in the Americas. Overall, sales grew 9% for the quarter or 17% on a constant currency basis.

With strong momentum going into the new financial year, combined with an enormous untapped market, ResMed could be an excellent pick-up for long-term investors. Better yet, it's trading at a nearly 19% discount to its 52-week high at just $8 per share.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. 

Tim McArthur: Pact Group Holdings Ltd (ASX: PGH)

Finding a stock that offers the combination of defensive earnings streams, coupled with expectations of double-digit earnings growth plus a growing dividend is a tough ask in the current economic climate. Throw in the demand that a stock with all these characteristics also be available at a reasonable price and the list of opportunities narrows significantly.

One stock that does look to meet the above criteria is packaging products manufacturer Pact Group. The group specialises in producing rigid plastic containers for the food, dairy, beverage, chemical, agricultural and industrial sectors. The company has operations throughout Australia and New Zealand along with a growing presence in the Asian region. The stock looks good value to me.

Tim McArthur does not own any shares in Pact Group.

Andrew Mudie: FlexiGroup Limited (ASX: FXL)

I believe FlexiGroup shares have been oversold. Shares are today changing hands at a price 25% lower than they've been in the last 12 months while the company trades on a forward price to earnings ratio of just 9, a forward dividend yield of over 6%, and profit is forecast to be 7% higher this year than last. Although the company recently lost its CEO, management remains capable and willing to grow the brand. I see more upside than downside from here assuming a reasonable replacement is found for the CEO.

Motley Fool contributor Andrew Mudie owns shares in FlexiGroup Limited. 

Peter Stephens: JB Hi-Fi Limited (ASX: JBH)

While the outlook for retailers is relatively downbeat, electronics retailer JB Hi-Fi has delivered share price growth of 22% in 2015. That's partly because of expectations for earnings growth of 5.6% per annum over the next two years and it trades at a discount to the retail sector, with it having a P/E ratio of 14.9 versus 15.4 for its sector. Meanwhile, with interest rates heading south, JB Hi-Fi's sales could be boosted to allow it to maintain the strong dividend growth that has contributed to its present yield of 4.5%.

Peter Stephens does not own shares in JB Hi-Fi.

The post Top stock picks for August appeared first on The Motley Fool Australia.

The group is now forecasting full year earnings of $2.3 million, compared to $5.6 million last year. The big drop has been blamed on a steep decline in earnings from a flat-lining Western Australian economy, corporate restructure costs and provisions over student refunds for third party courses that have been cancelled.

Despite the international and for-profit higher education sectors being identified as the next growth areas many listed education businesses have struggled to harness the tailwinds, just as they have in the tourism or agriculture sectors for example.

Take businesses like Vocation Ltd (ASX: VET) and Navitas Limited (ASX: NVT), both of which have demonstrated the risks of investing in businesses that are reliant on the largesse of the government, public sector, or universities. A single contract loss or failed audit can result in sudden and significant downturns.

Another education giant SEEK Limited (ASX: SEK) recently blamed "incomplete enrolments and very high withdrawal" rates at TAFE NSW as partly responsible for its profit downgrade. While it also conceded that Liberal government reforms on VET FEE HELP designed to stop the incentivisation of students to enroll on courses may also have a negative impact on certain SEEK Learning partners.

SEEK also recently announced it still hopes to put for initial public offer its 50% ownership interest in IDP Education in 2015. This is a business reportedly valued at up to $450 million, with exclusive rights to providing and charging for the lucrative IELTS tests, although the IPO is yet to materialise despite reports of it dating back to 2013.

In my opinion some of the problems in the sector mean many of the businesses in it are ones to avoid, despite the obvious growth appeal of the international education sector in Australia.

There are exceptions with SEEK more focused on the online advertising space, while Kip McGrath Education Centres Limited (ASX: KME) looks another well managed option.

The post Academies Australasia Group Ltd gives another tough lesson to investors in education sector appeared first on The Motley Fool Australia.

Kip McGrath Education Centres Limited (ASX: KME) is an online tutoring and professional education services provider that appears to be back on a growth trajectory thanks to some operational reforms. The company is growing in Australia and overseas, has a healthy balance sheet, and recently declared a 0.5 cent per share half-year dividend. It looks to be in a growth sector and has lifted 2.5 cents or 5.3% to 50 cents today on improved investor sentiment.

REA Group Limited (ASX: REA) is the online juggernaut that recently disappointed the market with its quarterly trading update. Valued highly for its consistent double-digits earnings growth the stock was sold off despite some impressive numbers and today's 2.9% lift is most likely the work of bargain-hunting investors.

Greencross Limited (ASX: GXL) is the veterinary services and pet shop aggregator that crashed to a 52-week low recently on concerns over the sustainability of its acquisitive growth strategy. The stock has jumped 22 cents or 3.2% today to $7.03 as some in the market decide they'd be barking to ignore it.

TFS Corporation Limited (ASX: TFC) has today lifted 4% to $1.95 after it recently reported cash earnings of $10.4 million for the nine months ending March 31, 2014. Tropical Forestry Services is based in Northern Australia where it grows and manages vast sandalwood plantations covering 9,085 hectares – the equivalent of around 3 million trees. Moreover the value of sandalwood and its oil derivative has been on the rise due to growing demand and limited supply.

TFS Corp still presents as a medium-high risk investment opportunity with a tantalising outlook, although it's not the only one offering growing returns..

The post Here's why these 4 companies are soaring higher today appeared first on The Motley Fool Australia.

But there's a perfectly valid reason why.

You see, not every educational company follows Vocation's model or even caters to the same sector of pre-university type courses. The two I'm suggesting you keep an eye on focus almost exclusively on kids and school-level education.

3P Learning Ltd (ASX: 3PL) has a market cap of $324 million, but appears to be flying under the radar, with shares trading below the IPO price of $2.50, at $2.43 currently. There's a likely reason for that though. Shares were overpriced in the IPO, sporting a P/E ratio for the 2015 financial year of a whopping 34.7x and a tiny dividend yield of 0.7%.

The online education company offers cloud-based software-as-a-service (SaaS) products for schools and students in grades K-12, including the well-known brands Mathletics, Reading Eggs, Spellodrome and IntoScience. Students and schools in 202 countries and territories now use 3P's products and is growing rapidly, thanks to the migration from printed textbooks to online.

In the latest half, 3P saw revenues rise 21% to $18.4 million and pro forma net profit after tax jump 29% to $4.1 million. With strong growth in the online education sector predicted, even system growth should see 3P benefit.

Kip McGrath Education Centres Limited (ASX: KIP) provides after school tuition in 520 centres in more than 15 countries around the world, mainly in reading, spelling, English and maths to students who may be struggling with their school work or who just want to do better. A tiny company compared to 3P, Kip McGrath boasts a market cap of around $20 million, and a P/E ratio of 20x.

In the last half, Kip McGrath paid a dividend for the first time in five years, after producing a record first half profit of $474,000 as revenues surged by 31% to $7.5 million. Impressively, most franchisee sales are skewed to the second half, suggesting the company could produce a very strong result when it reports in August.

Whilst neither company looks cheap, Foolish investors might want to add these two to their watchlists.

The post 2 top quality education stocks to add to your watchlist appeared first on The Motley Fool Australia.

If you're doing it right, you're finding out as much information as you possibly can before making a decision, and then you're looking continuously for news which could prove or disprove your initial investing thesis.

All three companies in today's article have recently released very important market-sensitive announcements, which means it's time for a quick run through to see if your investment thesis still holds.

ABM Resources NL (ASX: ABU) revealed today that it has signed an option with Ord River Resources Ltd (ASX: ORD) over its Suplejack Project which is just 25km north-west of ABM's existing Hyperion field.

An initial Inferred Resource assessment (conducted by Ord and unverified by ABM) estimates the field contains roughly 202,000 ounces of gold at an average grade of 2.11g/t.

In return for an initial $100,000 option fee and $200,000 on expenditure over the next 18 months, ABM gains the right to farm-in and joint-venture the field with Ord River Resources. Should ABM decide to participate in a joint venture, $300,000 further expenditure on exploration over the next two years will gain ABM a 70% interest in the project.

Given that the field is right next door to ABM's existing Hyperion resource and within close trucking distance to the company's Coyote crushing operations, the agreement is an excellent investment in ABM's future for a very low cost.

Initial rich drilling results also provide substantial promise for expanding the resource in time.

Australian Bauxite Ltd (ASX: ABX)

Australian Bauxite recently signed a funding agreement with Noble Resources that was met with mixed reaction from the market, initially sending the shares up to 52-week highs of 35c before settling at $0.29c per share.

The agreement sees Australian Bauxite granted a total of $8 million in finance at 8.75% interest by Noble with ABX's Tasmanian assets held as security.

Approximately $6 million will be used to commence mining in Tasmania, with $2 million available for future expansion if necessary.

In addition, Noble will purchase 50% of the Tasmanian product at an unspecified fixed price, and be entitled to a 2.5% royalty on the 50% it doesn't purchase for the first four years.

It's a pretty tough agreement in the circumstances, with Australian Bauxite perhaps disadvantaged in the negotiations by its explorer status. However the 'purchase offtake agreement' with Noble also provides some price certainty should the market move adversely.

Thankfully for nervous shareholders the agreement only covers the company's Tasmanian assets, although Noble also has a right of first refusal to fund future financing agreements with ABX.

In summary, Australian Bauxite still looks to be a buy at its current price, and in fact I added more to my holdings after the announcement last week.

Kip McGrath Education Centres Limited (ASX: KME)

Met with surprisingly little fanfare, today's announcement regarding the successful completion of a 12-month trial of KipOnline is great news for investors.

Online increasingly looks to be the future of everything, including education, and approximately 180 Kip McGrath centres will be offering the company's new online initiative as of this month.

CEO Storm McGrath believes that the online program will increase student engagement and motivation, while also engaging parents better through 'live' real-time feedback after class.

Parents want the best for their children, and improved engagement, focus, and motivation are big plusses to continued spending on a child's education.

The ability to involve parents further through feedback should not be underestimated either, as it is likely to lead to better outcomes for parents, students, teachers, and ultimately shareholders.

There's a lot more to investing in your future than just a good education…

The post Here's why these 3 small caps could be odds-on winners appeared first on The Motley Fool Australia.

Ryan Newman – Japara Healthcare Ltd (ASX: JHC)

Given that it only listed on the ASX earlier this year, aged-care provider Japara Healthcare will be a name unfamiliar to most investors. However, it has the potential to be a great investment for those who get in early.

Not only is the company in a box-seat to benefit from Australia's ageing population, it is also a relatively safe bet for investors in times of economic uncertainty. Demand for healthcare services doesn't tend to fluctuate too greatly even in the toughest conditions.

The stock is trading at $2.38, which is significantly below its peak at $2.79 in May.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Andrew Mudie: Ozforex Group Ltd (ASX: OFX)

I've written about OzForex group before because I simply don't understand why the market has given it such a tough run. The company listed in October last year and quickly rose from the $2 offer price to $3.50 in March but fell back to around $2.50 in June after investors were disappointed by the number of active users reported by the company. User numbers were down 2% from the IPO forecast while most other metrics were beaten by 5% or more.

I view the company as a great long-term opportunity due to its high growth and disruptive nature. In my view the outlook has not changed enough to account for the severe price drop and thus it still appears great value.

Motley Fool contributor Andrew Mudie owns shares in OzForex. You can find Andrew on Twitter @andrewmudie

Owen Raszkiewicz: WAM Capital Limited (ASX: WAM)

WAM Capital is the largest listed investment company run by Geoffrey Wilson of Wilson Asset Management. Since inception the investment portfolio has returned an average of 18.2% per annum and has outperformed the All Ordinaries index by a whopping 9.5%pa (before expenses, fees and taxes).

Currently its share price is trading slightly above its net asset backing but I think the group has a healthy cash balance (30.7%) and its top holdings are a number of fantastic growth stocks which provide healthy upside potential. Although management's goal is to provide a rising dividend stream, given the nature of the business predicting payouts is fraught with risk. Its trailing dividend yield is 6.5% fully franked.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in WAM Capital.

Sean O'Neill: ABM Resources NL (ASX: ABU)

Although there are several compelling reasons not to be in gold at the moment, I believe this gold explorer transitioning to producer still has considerable potential for the speculative investor.

Reserves of 611,000 ounces at an average grade of 10g/t and the proximity of processing infrastructure should help keep the cost of production competitive, while even modest production figures would leave the company looking very cheap.

ABM's more recent explorations have found sizeable veins of up to 167g/t of gold which I believe will maintain if not increase total reserves and ore quality going forwards.

Motley Fool contributor Sean O'Neill owns shares in ABM Resources.

Aryan Norozi: Senex Energy Ltd (ASX: SXY)

Mid-tier oil and gas producer, Senex Energy operates and develops energy sources in the lucrative Cooper Basin. With a 38% decline in FY14 net profit, investors are not happy and shares are trading close to 52-week lows.

However, Senex is jam-packed with growth potential and current prices scream a buy. Its recent announcement of an asset swap with Queensland Gas Company will bring it closer to its FY18 production strategy, which previously seemed unattainable. A good measure of future potential is director dealings. With Senex's directors increasing their collection of shares, I think it has a bright future ahead.

Senex sits on no debt and impressive reserves, and its current price of $0.555 means it trades on a cheap 9.4x FY15's projected earnings. I think Senex offers investors a rare opportunity to gain entry into an exciting growth play.

Motley Fool contributor Aryan Norozi does not own shares in any of the companies mentioned.

Regan Pearson: Ainsworth Game Technology Limited (ASX: AGI)

Five years of double-digit growth; high profit margins; low debt; an outlook for sustained international growth and a price of just 15x earnings has shot gaming machine company Ainsworth Game Technology (AGI) to the top of my watchlist in October.

Additionally, AGI will benefit from the falling Aussie dollar with international revenues contributing 41% of total revenue. The U.S. remains a key focus for growth, as does online and mobile gaming.

AGI is a strong business, but founder and 53% shareholder Len Ainsworth is now 91, so there is potential for some uncertainty over ownership succession.

Motley Fool contributor Regan Pearson does not own shares in any of the companies mentioned.

Tom Richardson: Kip McGrath Education Centres Limited (ASX: KME)

Online and classroom-based education business Kip McGrath nearly doubled net profit for the financial year ending June 2014. The company expects an increased profit in FY15 as its online education model continues to gain traction in Australia and around the world. The principal activities of the business are the sale of franchises and then selling further services to franchisees in their education fields. It provides services to the pre-school, primary, secondary and tertiary education markets.

With online education and private tutoring for children clear growth areas, Kip McGrath has the opportunity to build a big future.

Motley Fool contributor Tom Richardson owns shares in Kip McGrath Education. 

The post Top stock picks for October appeared first on The Motley Fool Australia.

Are these price falls an opportunity for investors to pick up shares on the cheap, or is their more downside to come?

Here's our view of 3 of them…

Kip McGrath Education Centres Limited (ASX: KME) has seen its shares lose 15.3% to 30.5 cents in late afternoon trading, but shares are still up 15% for the week. The company provides education services for the pre-school, primary, secondary and tertiary markets and recently reported a 95.7% increase in net profit, on the back of a 30% increase in revenues. Shares shot up on the announcement, and it appears some traders are taking the opportunity to take some profits. This may be an opportunity for Foolish investors to get set in a company with strong growth ahead.

Structural Systems Limited (ASX: STS) shares are down 11.5% to 54 cents, after the mining services company came out of a trading halt. The company said it needed time to assess the impact of cost overruns on a major construction project, which has led to a net profit before tax of $2.1 million for the 2014 financial year. Banking covenants require the company to seek bank approval before paying a dividend, and there's no certainty that it will receive approval, although directors are optimistic. The issue shows what can go wrong with contracting companies, and one wonders if there are any more skeletons in the closet.

Investors have dumped Jumbo Interactive Ltd (ASX: JIN) shares, which are down 6.4% to $1.32 coming into the close. Jumbo announced a disappointing 6.6% fall in net profit to $2.8 million, which the company says is due to an 18% decrease in major prizes and jackpot activity in Australian lotteries. The company's operations in Mexico and Germany are yet to turn a profit, but could turn out to be more valuable than the Australian operations in the future. Jumbo is one to watch, but it's probably not one I'd be jumping into right now.

The post Why these 3 ASX stocks are getting crushed today appeared first on The Motley Fool Australia.

Readers should always check my disclosure to see whether I also own the stock – that will tell you whether it is a watchlist stock or a portfolio holding. Having said that, my watchlist stocks sometimes outperform my portfolio stocks, at least in the short term. For example, when I covered Hansen Technologies Limited (ASX: HSN) in September 2013, I said, "at $1.10 the market is probably pricing in a little more growth than I am comfortable with, but Hansen remains firmly on my radar as a potential investment."

Since that time, Hansen dropped to $1.01, then paid a dividend of 3c, then appreciated to its current price of $1.34 – a gain of over 20% in less than a year. I'd like to think I helped someone buy Hansen at a good price (or gave someone the inspiration to hold on) but I didn't buy it myself. Furthermore, there are companies that I've held that I've since sold for no real gain or even a loss – one example is Prime Media Group Limited (ASX: PRT) – which I bought instead of Hansen. If you want to know whether I (still) hold a certain stock, you can ask.

The reason I mention this is that I want people to understand that to get the best out of my articles, you need to check my disclosure and account for the fact I might be wrong. Frequently, if I like a company but don't own it, I think it's too expensive. Another possibility is that I'm fully invested at that time (it happens) and I don't want to sell an existing holding. There is also the situation whereby I think that, on balance, I can afford to wait until three days after I write the article (due to trading rules) and buy the company then. Finally, I've increasingly moved my portfolio to a more diversified selection of micro-cap companies that I don't cover often. In part, that's because the market is more inefficient at that end, but it is also because the trading rules don't apply to stocks I've never covered.

That's important because the trading rules limit my options. For example, I recently loaded up on shares in Kip McGrath Education Centres Limited (ASX: KME) at 20.5c, because a substantial holder was awkwardly selling large chunks of it at the end of the financial year. They pushed the share-price down from about 40c to 20c, and I simply couldn't resist. Since I already owned shares (purchased at 29c) I am now overweight the company, and I'd be tempted to sell a small part of my holding at about 31c, but for now, I must hold (it may well turn out for the best, anyway).

When I make a comment like that, I risk encouraging others to sell, and by the time I can actually sell (a quarter) of my shares, the price may well have fallen down a bit. Clearly, it's against my interests to even state my intentions, even though there is no way my small holding could move the market. However, at the end of the day, I'm content to hold all my shares into the results unless I can sell (just a few) at around 31c, preferably a little higher. I suspect a buyer at 31c would be getting a good deal, anyway, and I do tend to sell too early.

At the risk of tying my own hands in the future, I'll also disclose I bought Capilano Honey Limited (ASX: CZZ) recently. I like Capilano because Australia has plenty of competitive advantages when it comes to making honey. We have relatively low use of bee-killing pesticides compared to other places, and our apiarists are amongst the most skilled at protecting bees from the plethora of threats to their wellbeing.

Capilano has credibility because its main brand uses 100% Australian honey, and it has a good business strategy of collecting premium honey, building more luxurious brands, and selling the stuff at higher prices. However, I have concerns about the amount of honey that will be produced in Australia as El Nino takes hold. The hotter drier weather may result in less flowers for the bees and could even melt hives, if it gets really hot.

I bought shares in Capilano Honey at $5.70 and $5.77 just days prior to a 20c dividend, making my buy price effectively about $5.55. However, struck with what seemed a super-sweet opportunity, I went a bit overboard, and bought about double my normal position size. I then decided this was inappropriate due to my inability to predict honey yields, so I sold about half at about $6. Shares currently trade at $6.20 and I intend to hold the rest for a while. If there's one thing I know for sure it's that I have plenty more to learn – and that's probably the best investment I can make.

The post How to read my articles plus 2 stocks I bought recently appeared first on The Motley Fool Australia.

That's some handy profits, although I only hold medical software company Global Health, these days. I'm relying on the fact that the company is continuing to grow revenue. It was some comfort to see that one director bought some shares on market recently, even if he did fail to notify the ASX on time. Meanwhile, hopeful biotech Anteo Diagnostics still hasn't announced that company-making first deal investors are waiting for, though if and when it does, the share price should soar.

My current favourite speculative stock is Kip McGrath Limited (ASX: KME), a company that owns the eponymous tutoring franchise. The global brand is arguably undervalued by the market, and locally cuts to public school funding will make private tutoring all the more important. Like Global Health, I expect that Kip McGrath will cease to be considered speculative in the coming years, by reporting consistent profits.

Electric scooter manufacturer Vmoto has recently recorded its maiden yearly profit, and was even narrowly cashflow positive in the most recent quarterly report. Unfortunately, Director Simon Farrell has suddenly resigned for unexplained reasons and the company was put into a trading halt because it lacks the requisite number of Australian based directors. While I have reservations about management, the story is compelling because 2-stroke scooters are extremely polluting: their fumes are particularly harmful to humans (more so than car fumes). Chinese cities are keen to encourage electric scooters as a replacement.

Another speculative stock that deserves to be on your watch-list is Analytica Limited (ASX: ALT) which makes and is marketing a treatment for incontinence. Apparently, the problem is more widespread than you might think. I look forward to adding the company to my portfolio if it comes down in price. The capital raising at 2.4c was not fully subscribed, and the remaining shares will be placed (mostly to the chairman).

Part of the reason that I'm low on cash (for investing) is my recent purchase of MGM Wireless Limited (ASX: MWR), a company that specialises in mass communications, allowing schools to contact all their students instantaneously via SMS. The company is not exactly cheap at current prices, but it did recently buy another company that provides online payment and communication capability to schools, allowing parents to order lunch or sign permission slips over the internet. Though there is undoubtedly competition, the acquisition will prove positive if MGM can roll out the platform to some of its existing clientele.

Nanosonics Limited (ASX: NAN) is another interesting biotechnology company. It makes a device that can sterilise ultrasound probes more effectively than the current methods. The system can literally save lives by preventing infection. Nanosonics is a bit too expensive for me, with a current market cap of $210 million, but holds significant potential – especially at a lower price.

The post 7 speculative stocks deserving your attention appeared first on The Motley Fool Australia.

As you can probably see, Real Institute already provides similar services to Vocation, but adds additional scale, geographic and industrial diversification. What Vocation really wants though is the exposure to new sources of revenue and Real Institute's enterprise clients.

According to the press release, Real's online learning channel is regarded as one of the best in Australia, and the company has won numerous awards for education and training. More than 25,000 students have been trained by Real since it was founded in 2007, and 10,000 students alone enrolled last year.

Vocation will pay $54 million for Real Institute, funded from a combination of cash and shares. $40 million in cash and $7 million worth of Vocation shares will be paid initially, with a further $7 million share payment to be paid conditional on achieving Real's forecast results this year.

Vocation, along with the likes of Navitas Limited (ASX: NVT), Kip McGrath Education Centres Limited (ASX: KME) and Redhill Education Ltd (ASX: RDH) are Australia's major ASX-listed education and training providers.

All four companies have had a strong year so far, with Kip McGrath doubling its share price, while Vocation has seen gains of 39%, and Navitas and Red Hill have put on 14.4% and 18.8% respectively. Compared to the S&P/ASX 200 Index's (Index: ^AXJO) (ASX: XJO) miserly 2.4% rise, they are positively steaming ahead.

More gains could be on the cards, as demand for education and training rises and Foolish investors may want to add these stocks to their watchlist. After all, they could be a brilliant way to make $1 million on the sharemarket, as our new report below discusses.

The post Why Vocation Ltd's shares climbed 8% today appeared first on The Motley Fool Australia.

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

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

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

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

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

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

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

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

Foolish takeaway

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

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

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