The company provides subsea umbilicals, risers and flowlines (SURF) buoyancy and corrosion protection solutions to offshore oil and gas projects.

Based on an updated price target from Bell Potter, it still has significant upside.

Why did shares rise on Thursday?

Markets reacted positively to the company's 2025 AGM, which included a positive FY26 outlook. 

The company announced $70m of FY26 secured revenue (including YTD sales), comprising $65m of contracted Subsea work. 

It reiterated a strong quotation pipeline for drilling and SURF markets, with opportunities currently under negotiation likely to add to the FY26 orderbook upon conversion.

The team at Bell Potter stated that, in addition, revenue, EBITDA, and profitability will be weighted towards 2H FY26, with EBITDA expected to be positive in FY26. 

Why does this matter?

For a small-cap stock, guidance that EBITDA will be positive in 2026 is a big deal because it signals a fundamental shift in the company's financial health and risk profile.

Essentially, it marks a transition from "cash-burn" to "self-funding."

Many small-caps – especially in tech, biotech, clean energy, and early-stage industries – operate with negative EBITDA, meaning their core operations are unprofitable.

A move to sustained positive EBITDA in 2026 is significant because, although the company has hovered around breakeven and even turned positive before, long-term projections from Bell Potter show a durable and expanding profitability trend. 

This shift signals that the business model is stabilising and scaling, reducing future funding risk and increasing investor confidence in lasting growth.

Is this small-cap stock a buy, hold or sell?

While the guidance of a positive EBITDA is good news, Bell Potter remains cautious about this small-cap stock. 

In a report from the broker yesterday, it maintained its hold recommendation, but lowered its target price to $0.26 (previously $0.28). 

Bell Potter said phasing of major work has driven a worse-than-expected impact on revenue, EBITDA and profitability in 1H FY26, driving a downgrade to our 1H FY26 EBITDA estimate from $1.8m to -$0.6m. 

On a positive note, it said a strong skew to 2H FY26 EBITDA and profitability should drive positive FY26 EBITDA (BPe $6.2m, +25% YoY). 

Matrix Composites & Engineering Ltd has flagged further pipeline opportunities that could support FY26 project deliveries upon conversion, potentially representing upside to our forecasts.

Matrix Composites & Engineering shares closed yesterday at $0.23 after the 9.5% jump. 

Based on the updated price target of $0.26, there is an estimated upside of approximately 13% for this ASX small-cap stock. 

The post Why did this small-cap energy stock just jump 10% higher? appeared first on The Motley Fool Australia.

With company market capitalisations (caps) ranging from the truly tiny AEERIS FPO (ASX: AER) with a market capitalisation of just $7 million to the much larger $400 million panel repair consolidator AMA Group Ltd (ASX: AMA), the one thing all companies had in common was growth potential.

Another important point about these small, growth companies is that for the most part they remain off-the-radar of both brokers and investors. This under-researched situation lends itself to creating opportunity for enterprising investors keen to sniff out opportunities.

Here are three stocks which caught my eye…

Matrix Composites & Engineering Limited (ASX: MCE) was once a $750 million company with a share price north of $10, but today is a relative minnow with a market cap of just $60 million and a share price of 63 cents.

Matrix is a leading developer and manufacturer of subsea buoyancy systems for use in the oil and gas industry. Obviously its business is currently feeling the pressures of reduced capital spending as a result of the weak oil price, however, the company remains profitable and with a strong balance sheet which should see it weather the current storm.

Australian Ethical Investment Limited's (ASX: AEF) share price is trading close to an all-time high putting the company's market cap at around $70 million.

Australian Ethical is a fund manager which operates in the growing niche of investment management that meets a range of social, environmental and ethical principles. The company currently has $1.2 billion in funds under management.

IDT Australia Limited (ASX: IDT) has been a great performer for shareholders in the past year with the stock up 85% which has boosted IDT's market cap to $73 million.

IDT owns and operates a state-of-the-art pharmaceutical manufacturing facility and in 2014 the group acquired a range of US generic drug products which will see IDT expand into the generics market under a distribution agreement with US-based ANI Pharmaceuticals Inc. It has plans to sell the generics into major pharmacy chains such as Walmart, CVS, RiteAid and Walgreens.

The post 3 under-researched stocks for your watch list appeared first on The Motley Fool Australia.

These four stocks look headed for a strong gain today…

SMS Management & Technology Limited (ASX: SMX) shares are up 13.6% at $4.05, after posting a strong gain in net profit for the six months to December 2014. We cover the results for the IT consulting firm in more detail here.

Matrix Composites & Engineering Limited (ASX: MCE) shares are up 12.4% at 77 cents after it too posted a strong performance for the six months to December 2014. Net profit rose 567% to $3.9 million and the company declared a 2 cents per share dividend. But the falling oil price may dampen the future, as the company notes. You can read more on the result here.

Codan Limited (ASX: CDA) is up 10.5% at 95 cents, after the metal detector and radio communications group posted a 17% increase in net profit for the half year to December 2014. Metal detection revenues continue to fall, and it was the jump in communications product sales mostly responsible for lifting net profit.

Travel agent Helloworld Ltd (ASX: HLO) has seen its shares jump 28.8% to 38 cents. Today the company informed the market that investment bank UBS had sold 31 million shares (7% of issued capital) to an existing substantial shareholder, Sintack, for 39 cents per share. That price was a 41% premium to the volume weighted average price over the past five days. Sintack now holds 19.3% of shares in Helloworld. Qantas Airways Limited (ASX: QAN) is still the largest shareholder with 29% of the shares.

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

The company, which offers products and solutions to the onshore and offshore oil industry, is based in Western Australia but concerns remain over future revenues due to the fall in the oil price.

So What: Today's share price move halts the steady decline in Matrix's share price which started in May 2014 after it hit a high of $1.60. This morning's price of 80 cents represents a 50% rise from a low of 53 cents, reached in late January.

The highlights of the announcement include:

• Revenue up 20.7% to $78.5 million
• EBITDA up 77.2% to $13.6 million
• Net Profit After Tax up 567% to $3.9 million
• Dividend of 2 cents per share announced (2.5% fully franked)
• A buyback of 10% of issued capital
• Cash from operations up 282% to $15.2 million

In addition, CEO Aaron Begley announced that the company has an $86 million backlog of work which is expected to sustain the company through to the end of September this year.

What Now: While the immediate news was good, investors should note that the company's income is heavily exposed to companies whose cashflow is heavily influenced by the oil price.

Thankfully, Matrix has the ability to flex production output up or down as required but this implies that earnings visibility, looking forward 12 months, is relatively low. Mr Begley noted that there will be some short term reductions in output due to market conditions but that the medium to long-term looks strong.

Conservative investors should be cautious about investing heavily in Matrix, especially as a yield play, as the group's earnings have fluctuated between a $33 million profit in 2011 to a $15 million loss in 2012 and finally back to profitability this year.

The post Matrix Composites & Engineering Limited jumps 17%: Here's what shareholders need to know appeared first on The Motley Fool Australia.

Can both be right?

As a matter of fact both forms of value investing are perfectly legitimate and can lead to good results over the long term. The key is that in both instances, the investor determines that there is a margin of safety between the price they are paying and the value they are receiving for stocks they buy for their portfolio.

Is either form easier or safer?

The advantage of paying a high multiple is that often you may be more likely to buy a growing, high quality company with good prospects. This may limit your potential for permanent loss of capital, however these types of situations are also more likely to be overpriced which means you potentially run a greater risk of overpaying.

Alternatively, a beaten-up, cheap stock can sometimes offer a more "obvious" margin of safety. The catch is that 'value traps' lurk amongst these types of stocks. This can lead to a permanent loss of capital.

3 potentially undervalued stocks

For investors who choose to focus on 'cheap' stocks, one sector which currently offers an enticing hunting ground for opportunities is the mining services sector. The sector has been badly affected by the slowdown in the resources sector which arguably has created some undervalued investment opportunities.

Here are three companies which are currently trading on low PE multiples that appear to have sustainable business models which should minimise the potential of them turning out to be value traps.

Downer EDI Limited (ASX: DOW) has a reasonably flat earnings outlook according to consensus data provided by Morningstar. Assuming earnings per share (EPS) of 45 cents per share (cps) in FY 2015, investors can purchase Downer on a PE ratio of 10.6x.

RCR Tomlinson Limited (ASX: RCR) had EPS of 33.1 cps in FY 2014 and earnings are forecast to grow to 33.5 cps in FY 2015. With the shares currently priced at $3.40, the stock is trading on a PE multiple of 10.1x.

Matrix Composites & Engineering Limited (ASX: MCE) is expected to see a bounce back in EPS this financial year to 9.9 cps from just 3.2 cps in FY 2014. If the company achieves this consensus forecast, it implies a forward PE multiple of 10.8.

The post 3 cheap stocks for value investors appeared first on The Motley Fool Australia.

And then there was the time I fluked my timing perfectly, and invested funds I had borrowed into the market just as the US invaded Iraq and stock markets around the world were at close to maximum pessimism. As markets recovered, my portfolio took off and generated substantial double-digit returns in just over six months.

Here are my 10 biggest mistakes…

1. That I didn't start early enough. Beginning investing in my 30s is certainly better than trying to generate a retirement nest egg in my 50s or 60s – but I still wish I'd started investing at an earlier age to take advantage of the magic of compounding returns.
2. Chasing high yielding companies without fully understanding their business. The dollar signs were flashing on some stocks with yields of 10% a few years ago. Unfortunately for me, both Great Southern and Timbercorp went bust.
3. Allocating too high a percentage in highly risky businesses. Yes, I put too much capital into stocks like Timbercorp and Great Southern, and less than I should have into better companies like Washington H. Soul Pattinson and Co Ltd (ASX: SOL), Macquarie Group Ltd (ASX: MQG), Mortgage Choice Limited (ASX: MOC) and ASX Limited (ASX: ASX).
4. A lack of patience. That resulted in far too high trading costs and a portfolio with more companies than I should've had. It's something I still struggle with.
5. Selling stocks too early. Having held Mortgage Choice for nearly four years, I sold out in 2012 for a reasonable profit, only to see it double from there in just over a year.
6. Believing the hype of management. When it comes to resources stocks, I've learnt to take management's production forecasts with a large grain of salt.
7. Buying hot stocks on a tip without doing my research. Matrix Composites & Engineering Limited (ASX: MCE) was one such stock. I was lucky enough to get out well above the current price, but it was still a loss that hurt.
8. Being too greedy. With some stocks, I should have sold out when Mr Market was offering me a ridiculous price. I passed and ended up riding the stock all the way back down past my purchase price.
9. Not investing in US stocks earlier. I've only recently begun buying international stocks, although I have held large positions in offshore exchange traded funds for some years. I wish I'd made more of an effort to buy Google, Amazon and Berkshire Hathaway years ago.
10. Buying into 'turnaround' stocks that didn't turn. Warren Buffett has famously stated that these types of companies 'rarely turnaround'. I didn't heed the master investor's advice.

Despite all those mistakes, I've still managed to generate returns of around 13% a year on average for my SMSF and investing portfolio. And that's the greatest thing about investing over the long term. I've learnt a great deal, and will still make more mistakes in the years ahead, but time gives me an edge to more than make up for those blemishes.

The post My 10 biggest investing mistakes appeared first on The Motley Fool Australia.