However, this does not stop beginner investors or speculators regularly trading shares in the hope of a quick profit, or in the hope of buying that 1 in a 1,000 company that goes on to be a huge winner. 

It's true that this end of the market can produce massive winners returning say 5,000% in just 5 years or more like Pro Medicus Limited (ASX: PME) or Nearmap Ltd (ASX: NEA), but finding these companies amongst today's contenders is a tough task that requires expertise and a little luck.

I don't propose to cover the below companies on the list below in much detail, but rather to make a couple of points around small or micro-cap speculating.

As you can see most of the companies below have lost around 95% of their value over the past year. 

If you lose 95% of your investment say from $100 to $5, you will need to make 1,900% just to get back to $100 again. An almost impossible task.

So speculating at this end of the market as a novice investor could permanently destroy your investment capital and end up excluding you from the real wealth creating mid and large-cap ends of the share market where small fortunes can be made without taking silly risks. 

The speculative end of the market is also lightly regulated and deliberately so, the principle of caveat emptor or "buyer beware" rules as most micro-cap companies are unprofitable or have little revenue. In other words they list to raise capital more than to allow 'mum and dad' investors to trade shares.

Raising capital is after all one of the two primary functions of stock markets.

As for most companies at this end of the market with little or no revenue bank debt is not an option. As bankers are definitely not foolish enough to lend.

This means every company at this end of the market will have an attractive story to sell to investors, but very few will go onto become big winners.

The light regulation also means this end of the market attracts plenty of dubious operators often perpetuating some of the oldest tricks in the share market scam book to profit for themselves. Anyone who loses money at this end of the market though has little recourse other than to blame themselves for their stupidity.

"The fault dear Brutus is not in the stars, it is in ourselves".

With Shakespeare's advice in mind let's take a brief look at the 10 worst small caps of FY 2019 according to Commsec.

Source: Commsec, July 3 2019.

Alderan Resources Ltd (ASX: AL8) is a copper mining explorer in Utah, USA. It raised $1.6 million from investors via a placement in May 2019.

Intiger Group Ltd (ASX: IAM) reports it operates a software development house to assist financial planners. The stock sits at 1 cent.

iBuyNew Group Ltd (ASX: IBN) is a residential property buying advisory group. The stock is down 94% in a year.

White Cliff Minerals Ltd (ASX: WCN) is a gold explorer focused in the Kyrgyz Republic and nickel-cobalt explorer in Western Australia. It raised $1.15 million (before costs) from investors earlier in 2019.

Change Financial Ltd (ASX: CCA) is in the "fintech" and payments technologies space. Investors appear unimpressed given the stock price.

Cycliq Group Ltd (ASX: CYQ) is a bicycle accessories business. It looks to have a long road ahead of it.

Bionomics Ltd (ASX: BNO) is a biopharmaceutical company researching treatments for anxiety, Alzheimer's and other common ailments. Speculative biotech stocks commonly bomb at the small-cap end of the share market on failed trial results.

Silver Chef Limited (ASX: SIV) is a kitchen equipment leasing business that ran into trouble in FY 2019 on the back of ballooning losses. 

Factor Therapeutics Ltd (ASX: FTT) is a speculative biotech researching wound care therapies.

Freedom Oil and Gas Ltd (ASX: FDM) is an oil and gas exploration company in Texas. Looking at the share price it's better at spending money than making it.

The post Warning: These are the 10 worst small-cap shares of FY 2019 appeared first on The Motley Fool Australia.

Three shares at the small end of the market that have caught the eye with strong gains today are listed below. Here's why they are on the rise on Thursday:

The Collection House Limited (ASX: CLH) share price has climbed 5.5% to $1.35 on the day of its annual general meeting. Ahead of the meeting the receivables management company announced a strategic alliance with Volt Bank aimed at delivering innovative and ethical financial services and products to customers. In addition to this, management reiterated its FY 2019 guidance for earnings per share between 15.2 cents and 15.5 cents. Positively, it now expects to achieve the high end of this range.

The Redbubble Ltd (ASX: RBL) share price has bounced back from a selloff on Wednesday with a 10% gain to $1.02. The ecommerce company's shares crashed lower yesterday after it revealed that changes to Google search algorithms had impacted its organic search sales by 3% year on year. This morning a note out of Goldman Sachs revealed that it has held firm with its buy rating and $1.95 price target despite this blip. While the broker acknowledges that there are short term risks, its positive investment case is built around the long-term outlook which remains unchanged.

The Silver Chef Limited (ASX: SIV) share price is 3% higher to $1.53 following the release of the equipment leasing company's AGM update. Within its trading update the company revealed that its bad debt levels for the first four months of FY 2019 are running at the target and historic level of between 2.5% to 3.5% of rental income. In addition to this, management said that it is confident that the many opportunities the company has in Australia, New Zealand and North America will deliver strong returns and value for shareholders.

The post Why these small cap ASX shares are on the rise on Thursday appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they are tumbling lower:

The Ardent Leisure Group (ASX: AAD) share price has continued its decline and is down a further 3% to $1.44. The entertainment company's shares have fallen heavily this week following the release of a trading update at its annual general meeting. Although the company's update was reasonably positive, investors appear a touch concerned by the 4.7% decline in constant centre sales by its Main Event business in October.

The Costa Group Holdings Ltd (ASX: CGC) share price is down 5.5% to $6.48 on the day of its annual general meeting. In its presentation the horticulture company's management reaffirmed guidance for low double-digit earnings growth in FY 2019. However, management's warning that its earnings growth would be skewed to the second half may have spooked investors. First half earnings are expected to be lower year on year.

The Food Revolution Group Ltd (ASX: FOD) share price has tumbled 8.5% lower to 16 cents. This decline comes despite an announcement this morning revealing that it has secured a 12-month supply contract to produce a new Apple Mango juice for Aldi. Management believes the supply contract will boost sales within Australia and expects it to be a key step forward as it rapidly expands its product range and realises the next phase of growth.

The Silver Chef Limited (ASX: SIV) share price has dropped almost 8% lower to $1.52 despite there being no news out of the equipment funding company. However, last month Silver Chef posted a statutory net loss after tax of $48.8 million. Its shares have unsurprisingly been under significant pressure since then. Earlier today they hit a multi-year low of $1.50.

The post Why these 4 ASX shares are tumbling lower today appeared first on The Motley Fool Australia.

Unfortunately brokers aren't bullish on all shares. Three which they are bearish on are listed below. Here's why they have slapped sell ratings on them:

Domino's Pizza Enterprises Ltd (ASX: DMP)

According to a note out of Deutsche Bank, its analysts have retained their sell rating and lowly $36.00 price target on this pizza chain operator's shares following its investor day last week. Deutsche believes that franchisee profitability is a big problem for Domino's and fears that it could impact its margins and store rollout plans. In addition to this, recent signs of food inflation are expected to be a challenge over the short to medium term. While I do think that Deutsche makes some great points, I remain confident that Domino's can overcome these issues and deliver on its long-term expansion plans.

Silver Chef Limited (ASX: SIV)

A note out of Morgans reveals that its analysts have downgraded this equipment leasing company's shares to a reduce rating and slashed the price target on them to just $1.62. The broker made the move after Silver Chef advised that its debt covenants have been waived until the end of March. The waiver was granted under the condition that the company raised a minimum of $45 million in additional capital in order to ensure that its net rental asset ratio is no greater than 65% by the end of February. Morgans fears that there are risks to its earnings and share price in the near term and I completely agree. I would stay well clear of Silver Chef for the time being.

Virgin Australia Holdings Ltd (ASX: VAH)

Analysts at UBS have retained their sell rating and 19 cents price target on this airline's shares despite yesterday's positive trading update. That update revealed that revenue for the first quarter grew 9.7% on the prior corresponding quarter and the trend is expected to continue in the current quarter. However, according to the note, the broker believes that rising fuel prices and underlying costs are going to reduce profitability over the next few years, making Virgin Australia a sell at the current price. I'm not as bearish as UBS, but would only class it as a hold at best.

The post Leading brokers name 3 ASX shares to sell today appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have tumbled lower:

The Altura Mining Ltd (ASX: AJM) share price has fallen 4% to 24.5 cents despite there being no news out of the lithium miner. However, yesterday the lithium miner's shares were one of three in the industry to inexplicably rocket higher on the back of no news. I suspect that profit taking may be weighing on its shares today.

The Freedom Insurance Group Ltd (ASX: FIG) share price has plunged a massive 23% to 10 cents following the release of its strategic review after the market closed on Tuesday. The Freedom Insurance board has decided to implement a restructuring of its insurance business. This will result in the immediate suspension of new business sales of all direct insurance products. While it will continue to service and renew its in force book of policies, it is unclear how much damage the Royal Commission has done to its book.

The Fortescue Metals Group Limited (ASX: FMG) share price has fallen almost 4% to $3.73. Today's decline is likely to be attributable to a broker note out of Morgan Stanley. According to the note, the broker has reinstated coverage on the iron ore producer with an underweight rating and $3.30 price target. The broker appears concerned with the price discount it is experiencing for its low grade produce.

The Silver Chef Limited (ASX: SIV) share price is down over 7% to $1.92. Investors have been heading to the exits in a hurry after the release of its results on Monday. As well as its results, the company revealed that its lenders have granted it another waiver for breaching its financial covenants. However, the waiver has been extended until March 31, conditional on a successful minimum capital raising of $45 million.

The post Why these 4 ASX shares have tumbled lower today appeared first on The Motley Fool Australia.

Four shares that have fallen more than most today are listed below. Here's why they have started the week in the red:

The Helloworld Travel Ltd (ASX: HLO) share price has fallen 2% to $5.91 after the travel company revealed the sell down of shares by executive directors and Qantas Airways Limited (ASX: QAN). CEO Andrew Burnes and Cinzia Burnes have each sold 2,500,000 shares at $5.50 per share and Qantas Airways has sold 2,000,000 shares at the same price. The sell down was undertaken after the company received many enquiries from domestic and international investors seeking liquidity opportunities. Mr Burnes hopes the improved liquidity will help the company gain inclusion on the ASX300 list in future.

The Nufarm Limited (ASX: NUF) share price has plunged 9.5% to $6.07 after announcing the completion of the institutional component of its fully underwritten 3 for 19 pro rata accelerated renounceable entitlement offer. The institutional component successfully raised approximately A$238 million.

The Silver Chef Limited (ASX: SIV) share price has dropped 5.5% to $1.96 following the release of the equipment financier's full year results. According to the release, Silver Chef reported a statutory net loss after tax of $48.8 million in FY 2018. The company also revealed that its lenders have granted it another waiver for breaching its financial covenants. The waiver has been extended until March 31, conditional on a successful minimum capital raising of $45 million.

The TPG Telecom Ltd (ASX: TPM) share price is down 3% to $8.29 despite there being no news out of the telco company. But with its shares rocketing higher over the last couple of months, I wouldn't be surprised if profit taking is weighing on them today. Especially given how some brokers have declared its shares as vastly overvalued.

The post Why these 4 ASX shares have started the week in the red appeared first on The Motley Fool Australia.

Three results that may have slipped under your radar are summarised below:

The Atlas Arteria Group (ASX: ALX) share price is down almost 4.5% to $6.74 after the toll road operator posted a disappointing half year result. Although the company, formerly known as Macquarie Atlas Roads, reported a 3.4% increase in its aggregate portfolio traffic and a 5.6% lift in proportionate revenue to $559.9 million, it posted a first half loss of $15.5 million. The loss includes expenses from internalisation costs and performance fees which were calculated pursuant to its Internalisation Proposal.

The Compumedics Limited (ASX: CMP) share price has zoomed 17% higher to 55 cents after reporting a sizeable jump in profits in FY 2018. The medical device company posted an 8% increase in revenues for shipped and invoiced sales to $37 million and a whopping 133% jump in net profit after tax to $2.8 million. In addition to this, investors appear to have been pleased with the company's guidance for FY 2019. Management expects revenue in the range of $40 million to $42 million and net profit after tax in the range of $4 million to $5 million. At the high end of its guidance range this means growth of 13.5% and 78.5%, respectively. Sales could be given an additional lift its China joint venture goes ahead. A decision on this joint venture is expected by mid-November.

The Silver Chef Limited (ASX: SIV) share price has risen almost 3% to $2.26 after the commercial equipment rental company released its preliminary full year results. Silver Chef's results were impacted greatly by the exit of its GoGetta business and a material reset of its collections strategy. This led to the company reporting a statutory net loss after tax of $48 million. One bright spot was that its underlying hospitality business posted a net profit before tax of $17.3 million. Looking ahead, the board and management remain confident in its core hospitality business and believe its transformation strategy will deliver growth and returns over coming years.

The post 3 results you might have missed on Thursday appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have started the week in the red:

The Ansell Limited (ASX: ANN) share price is down 8.5% to $25.42 after the health and safety products company released its full-year results. The market appears to have been disappointed by Ansell's 11.2% decline in earnings before interest and tax from continuing operations. The company also warned of increasing input costs and the potential negative impact of the trade war between the U.S. and China.

The Beach Energy Ltd (ASX: BPT) share price has tumbled 5% to $1.77 after the energy company's full-year results fell a touch short of expectations. Thanks to the Lattice Energy acquisition and rising oil prices, Beach Energy delivered an underlying net profit after tax of $302 million, up 86% on the prior corresponding year. The market had anticipated an underlying profit after tax of $307 million.

The Cardno Limited (ASX: CDD) share price is down 14% to $1.20 after posting a loss of $14 million in FY 2018. Management advised that the net loss after tax of $14 million included a $32.8 million charge to reduce tax assets associated with the change in US federal corporate income tax rate from 35% to 21%. EBITDA from continuing operations came in at $56.2 million, up 28% from $44 million in FY 2017. Unfortunately, this growth is unlikely to be sustained in FY 2019. Due to a number of investments management expects limited EBITDA growth in some divisions in the short term.

The Silver Chef Limited (ASX: SIV) share price has tumbled 14% to $2.46 after releasing its unaudited preliminary full-year results. The equipment financing company expects to post a statutory FY 2018 net loss after tax of around $48 million. The loss is largely attributable to the company's exit of the GoGetta business. This is expected to mean the company breaches its debt covenants, however it stressed that it enjoys the support of its lenders and expects appropriate waivers to be granted.

The post Why these 4 ASX shares started the week in the red appeared first on The Motley Fool Australia.

Four shares that have fallen more than most today are listed below. Here's why they have tumbled lower:

The Bellamy's Australia Ltd (ASX: BAL) share price has fallen 5.5% to $14.19 following the release of a broker note out of Goldman Sachs. Although the broker has retained its buy rating on the infant formula company's shares, it has slashed its price target by 18% to $21.00. Goldman made the move on the belief that Bellamy's CFDA approval could be delayed for a few months and negatively impact its sales in FY 2019.

The Class Ltd (ASX: CL1) share price has plunged almost 11% to $2.22 following the release of a yet another disappointing quarterly update. For the three months ending June 30, Class added just 5,158 accounts to lift its total accounts to 169,413. This came despite the company's aggressive marketing campaign and generous introductory offer for new customers.

The Platinum Asset Management Limited (ASX: PTM) share price has tumbled a sizeable 8.5% to $5.36 after the fund manager was the subject of a reasonably bearish broker note out of Morgan Stanley. Although the broker has retained its equal-weight rating, it slashed its price target down from $7.00 to $6.00 after adjusting its earnings forecasts due to the impact of several performance headwinds.

The Silver Chef Limited (ASX: SIV) share price has sunk a massive 19% to $3.14 following the release of a shareholder update. According to the release, lower than expected growth in the final quarter within the Hospitality segment means that underlying pre-tax profit is now expected to be within the range of $17 million to $18 million. Previous guidance for the segment had been for the range of $20 million to $24 million. As a result, management expects the company to report an FY 2018 statutory loss that "will be substantially greater than the previous FY18 net profit after tax guidance of between $9 million and $12 million."

The post Why these 4 ASX shares have tumbled lower today appeared first on The Motley Fool Australia.

The fund returned 8.9 per cent in May, soundly out-performing its benchmark of the official RBA cash rate plus 5 per cent.

Although micro and small cap stocks can offer exciting growth prospects, they come with greater investment risk.

The fund attempts to mitigate the risks by focusing on higher quality growth stocks, largely from the consumer, financial and technology sectors. It looks to avoid propositions such as minerals explorers, speculative stocks, fads and unproven business models.

Top Holdings

In its May performance update, the fund declared BWX Ltd (ASX:BWX), Smiles Inclusive Ltd (ASX:SIL) and Axsesstoday Ltd (ASX:AXL) as 3 top holdings.

BWX

The BWX share price soared 19 per cent higher in May after the personal care product group received a $6.60 per share management buyout bid.

Before the shock offer, BWX shares were in the doldrums, having fallen from $8 early in the year down to as low as $4.41. BWX shares trade today at $6.02.

Smiles Inclusive

Smiles Inclusive, which operates the Totally Smiles brand, is a recent IPO after raising $35 million in a public float where the shares were issued at $1.

The dental surgery company is aiming to double the number of outlets under its control to 100 by this time next year.

Smiles Inclusive competes with fellow ASX-quoted dentistry roll-ups 1300 Smiles Limited(ASX:ONT) and Pacific Smiles Group Ltd (ASX:PSQ). Smiles all round!

The Smiles Inclusive share price closed May just 1 per cent above its IPO price, and now trades at 97 cents.

Axsesstoday

The Axsesstoday share price jumped 11 per cent higher in May.

The company is a leading specialist lender to small and medium businesses. The company is growing quickly, with loan receivables increasing by over 180 per cent CAGR since the first half of 2016. Axsesstoday is forecasting double digit earnings growth over FY19.

Writing on Livewire, Josh Kitchen of K2 Asset Management recently said Axsesstoday shares were trading on a one year forward P/E of 12 times, with earnings growth of over 20 per cent per annum in the foreseeable future.

In Mr Kitchen's opinion, AXL shares offer "outstanding value relative to its peers." Peers include failed recent IPO Prospa and fallen hero Silver Chef Limited (ASX:SIV). The Silver Chef share price has plunged from a high of around $12 in October 2016, now trading at $3.93.

Last month

In April, as well as BWX, Smiles Inclusive and Axsesstoday, the Bennelong Emerging Companies Fund declared Freedom Foods Group Ltd (ASX:FNP) and CML Group Ltd (ASX:CGR) amongst its top holdings.

The Freedom Foods share price is up 32 per cent over the past 12 months, while the CML share price has doubled over the same period.

The post Popular small cap fund names its top 3 ASX holdings appeared first on The Motley Fool Australia.

While the vast majority of shares on the ASX have dropped lower today, some have managed to defy the market. Here are four shares ending the week with a move higher:

The Animoca Brands Corporation Ltd (ASX: AB1) share price has pushed 5% higher to 6.1 cents after announcing the launch of its Crazy Defense Heroes mobile game in the Americas and Europe on IOS devices. The game has been very successful in the Asia, ANZ, and Africa markets, and management is optimistic it will succeed in these new markets.

The Beadell Resources Ltd (ASX: BDR) share price is up 2.5% to 8.5 cents. While not all gold miners have moved higher today, a few small miners have benefited as investors bet on the gold price moving higher after President Trump shocked global markets by announcing plans to place a tariff on US$50 billion of imports from China.

The Silver Chef Limited (ASX: SIV) share price has jumped 6% higher to $3.71 despite there being no news out of the equipment funding provider. Prior to today, Silver Chef's shares were down 53% over the last 12 months. This could mean bargain hunters are swooping in now.

The Vista Group International Ltd (ASX: VGL) share price is up almost 1% to $2.70 after the film industry software solutions company announced that it has terminated its French market distribution agreement with Côté Ciné Group. According to the release, the company has decided to address France directly. It intends to build on its sales and delivery capabilities to take advantage of the opportunities the significant cinema market offers.

The post Why these 4 ASX shares are ending the week with a move higher appeared first on The Motley Fool Australia.

One of the worst performers today was the Silver Chef Limited (ASX: SIV) share price. It finished the day down almost 7% to $7.03.

Why did its shares sink lower?

This morning the equipment financier provided the market with a trading update. Although its core business is performing largely in line with expectations, it is having a few issues with its back book.

The back book relates to the aged portion of the GoGetta asset base, which largely constitutes poor performing customer contracts in the now discontinued Light Commercial channel.

According to the release, customer credit performance in the channel has been poor and collection of arrears and repossession of assets has been challenging. This has led to the recovery of arrears lagging against internal targets.

Silver Chef's shares are now down almost 21% since the start of the year.

The post Why Silver Chef Limited shares sank 7% lower appeared first on The Motley Fool Australia.

Tom Richardson: Macquarie Group Ltd (ASX: MQG)

I'll name the asset manager that also does some investment banking as a good looking investment opportunity given the decent mix of value, growth and yield still on offer. I expect the group should deliver more than $7.20 per share in earnings over fiscal 2018, while dividends should come in around $5.10 per share. On these conservative forecasts then the stock changes hand for around 13.7x forecast earnings on a 5.2% yield.

It's also leveraged to the potential for growing profits thanks to significant company tax cuts in the U.S. with capital markets strengthening across the bank's key global markets. Macquarie has launched a $1 billion share buyback itself which suggests it also thinks the stock is good value under $100.

Motley Fool contributor Tom Richardson owns shares in Macquarie Group.

Tristan Harrison: Class Ltd (ASX: CL1)

Class provides automated cloud software for self-managed superannuation fund (SMSF) administrators. Thousands of SMSFs are switching over to Class every quarter and this should deliver good growth over the next few years.

The recent government delay in changing the regulations and a (perhaps temporary) slowdown in the growth of SMSF accounts added to Class has seen its share price hammered down to $2.35. I think its non-SMSF product called Class Portfolio could be a good boost to future profit, alongside Class Super. I think today's price is a compelling buy.

Motley Fool contributor Tristan Harrison has no financial interest in Class Ltd shares.

Kevin Gandiya: Janus Henderson Group plc (ASX: JHG)

Janus Henderson Group was formed following the merger between Janus Capital Group and Henderson Group. It now has over US$345 billion in assets under management and is set to benefit from the economies of scale created by the merger. It has no long-term debt, a decent return on equity of 15%, and a good spread of asset classes & geographies that it focuses on.

Its share price currently trades at 16x earnings, which looks reasonable value given the cost savings ahead.

Motley Fool contributor Kevin Gandiya has no financial interest in Janus Henderson Group plc.

Regan Pearson: Ellex Medical Lasers (ASX: ELX)

I'm picking Laser and eye health manufacturer Ellex Medical Lasers again as we head to 2018. The company has laid the ground work for material growth with expanded production facilities and $23 million from a recent capital raising to fund sales growth in the U.S.

Eye health is a rapidly growing market as populations age and Ellex has seen strong sales growth of its glaucoma treatment device iTrack. The product only made up 11.4% of total revenue in the 2017 year, but sales were up 71% in the three months to September 2017 – a strong start.

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

James Mickleboro: Baby Bunting Group Ltd (ASX: BBN)

This baby products retailer's shares have been amongst the worst performers on the market this year and fallen a massive 41%. Its shares have come under pressure as a result of tough trading conditions due to clearance sales following the closure of several competitors.

I believe this headwind will only be short-term and the company will come out of it in a stronger position. So with its shares selling for under 15x earnings and providing a trailing fully franked 5.1% dividend, I think Baby Bunting could be a great option.

Motley Fool contributor James Mickleboro has no financial interest in Baby Bunting Group Ltd.

Steve Holland: Wesfarmers Limited (ASX: WES)

The conglomerate has struggled as Coles faces competition from new players including Amazon and Kaufland, while falling behind Woolworths. What's more, Wesfarmers' attempt to tap the UK market with Bunnings has so far proved difficult. But this can work in an investor's favour, providing an opening to get in while others turn away. Wesfarmers' history of healthy returns shows it is a company that shouldn't be dismissed lightly. It will come back. Until then, sit back and enjoy the dividends.

Motley Fool contributor Steve Holland has no financial interest in Wesfarmers Limited.

Chris Coe: Silver Chef Limited (ASX: SIV)

The stock was oversold in August due to missed guidance with the FY 2017 results, but there were positives also, such as revenues increasing 29.4% to $286 million and good results from the Canadian operations. The price has since recovered from the resulting low of $6.67 in September to $8.00 today.

The outlook is promising and at last month's AGM the company predicted the current year profit would be up 18%-28%. It has a price to earnings multiple of 14 and price to sales multiple of 1.1, it also offers a 4.6% dividend yield.

Motley Fool contributor Christopher Coe has no financial interest in Silver Chef Limited.

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

Silver Chef has many small loans, so the credit risks are more predictable and spread out over different businesses. Hospitality bad debts remain within the target range of 2.5%-3.5% and management expects this to continue through FY 2018.

The company also has geographical diversification with operations outside Australia, in New Zealand and Canada, which gives it more diversification than hospitality financing and leasing rival Axsesstoday Ltd (ASX: AXL).

The Canadian segment, while only 9% of the overall business, performed well in FY 2017, delivering $18.6 million of originations and a rental asset base at cost of $25.3 million, with good growth potential as the company intends to expand into the less penetrated Eastern Provinces.

Silver Chef has put the wheels in motion to securitise $200 million of its lease receivables and this will provide a new way of funding growth rather than the need for bank finance or new equity.

The share price plunged in August on the FY 2017 results, due to missed guidance, which was probably overdone as there were positives to see also, such as revenues increasing 29.4% to $286 million and good results from the Canadian operations.

Earlier in August 2016, the company announced it had been the victim of fraud involving fake customers and equipment vendors that impacted earnings, which were down 9.8% to $20.2 million.

Silver Chef has taken steps to ensure this will not happen again, thus making controls tighter to ensure there is no repeat.

The company has also cut out underperforming brokers and some equipment vendors, who did not align with the company's values.

The company currently has a P/E ratio of 14.36, P/S 1.01 and a dividend yield of 4.79%

Directors and senior management have large holdings in the company and as of 30 June 17, founder Allan English held 8,841,341 shares in giving him 22.6% of the company.

Andrew Kemp has 897,009 shares and Bede King owns 108,987 shares and both are directors.

The shares reached a high of $12.11 in October 2016, then fell in November 16 after news of the fraud was released to a low of $6.46.

So given the low valuation and the company forecasting a 20%-30% growth in net profits for the current year, the shares could be past the lows.

Investors looking for good dividend yield and a growing company, could do well to invest in Silver Chef in my opinion.

The post Should you buy Silver Chef Limited? appeared first on The Motley Fool Australia.

Four shares which have acted as a drag on the market today are listed below. Here's why they have started the week in the red:

The Compumedics Limited (ASX: CMP) share price is down 7% to 39 cents after reporting a 60% decline in net profit to $1.3 million. Management placed the blame on lower than expected sales in the United States following restructuring activities. Furthermore, sales from its Australian business fell 28% year-on-year.

The Japara Healthcare Ltd (ASX: JHC) share price has tumbled 11% to $1.80 following the release of its full-year results. Despite revenue rising 11% to $362 million, net profit after tax fell 2% to $30 million. Furthermore, EBITDA is expected to remain flat in FY 2018, before returning to growth in FY 2019 as developments complete.

The Qantas Airways Limited (ASX: QAN) share price has fallen 6% to $5.64 despite the release of several favourable broker updates this morning. Today's decline could relate to a sudden rise in fuel prices after Hurricane Harvey struck Texas.

The Silver Chef Limited (ASX: SIV) share price has plunged almost 11% to $7.59 after the commercial equipment rental and financing company released its full-year results. Although revenue increased 29.4% to $286 million, net profit tumbled a disappointing 9.8% to $20.2 million. I would suggest investors continue to stay well clear of this one.

The post Why these 4 ASX shares started the week in the red appeared first on The Motley Fool Australia.

Emerchants Ltd (ASX: EML) has a market cap of $394m and is the biggest of the companies here. Emerchants provides electronic payments solutions for prepaid card products and services, issuing and processing debit cards as well as others like store gift cards. Growth in sales is expected to soar as corporate bookmakers' customers make more use of winnings cards. The company has also expanded into the UK and just this week into the US with its virtual payments platform.

Consolidated Operations Group Ltd (ASX: COG) has a market cap of $157m but is virtually unheard of. Formerly known as Armidale Investment Corporation, Cons Operations is the holding company for several diversified companies offering business finance for several different purposes including asset and equipment finance, insurance and mortgage solutions and leasing and commercial asset rental. Several recent acquisitions should add materially to revenue growth, with earnings per share expected to follow.

Pioneer Credit Ltd (ASX: PNC), with a market cap of $152m, is a debt collector, specialising in unsecured retail debt portfolios. Pioneer also offers customers loans so they can consolidate debts and refinance existing loans. The company recently announced that it expected to see a net profit for the 2018 financial year (FY2018) to rise by more than 49% over the FY2017 profit. At the current share price of $2.54, shares are trading at an undemanding P/E of 15x for FY2017.

Axsesstoday Ltd (ASX: AXL) has a market cap of $72m. The company provides financing to businesses for new or used commercial equipment such as display fridges, pizza ovens, forklifts and other yellow goods. The list even extends to computers, printers and copiers as well as workstations and furniture. In some respects, Axsesstoday resembles Silver Chef Limited (ASX: SIV) and probably competes with Silver Chef in some industries. The company has reported strong market share growth translating into earnings, with a 157% growth in net profit after tax for FY2017 compared to FY2016, and flagged a 67% increase in net profit in FY2018.

Easton Investments Ltd (ASX: EAS), with a market cap of $37m, is the baby of the bunch. The company provides traditional accounting and asset & wealth management services. The first half of FY2017 wasn't one to write home about but was impacted by a one off extraordinary item. The good news is that the company continues to grow its funds under advice, as well as the number of SMSFs that are under the company's administration. Additionally, the majority of Easton's businesses generate higher earnings in the second-half of the year so that we can put the first half behind us.

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Key takeaways from the release include:

• Half-year revenue increased 36.8% to $137.8 million.
• Net profit after tax fell 55.4% to $4.6 million.
• Earnings per share of 12.9 cents.
• First-half earnings impacted by higher GoGetta fraud provision. Management expects a strong second-half earnings skew.
• Full-year earnings guidance in the range of $21 million to $23 million.

As was widely expected, the fraud attack on its GoGetta equipment vendors has proven material to earnings during the first-half. But even when accounting for the $2.6 million fraud provision, earnings would still be 33% lower than the prior corresponding period.

Elsewhere, investors may take comfort from a good performance from its Australian Hospitality segment. Rental asset numbers, finance lease receivables, and customer numbers all increased. Furthermore, the average contract size also increased by almost 15% to $11,873.

Pleasingly its Canada and New Zealand-based hospitality segments performed just as well.

What's next?

For the full-year, management expects earnings after tax of between $21 million and $23 million, compared to $22.4 million in FY 2016.

After such a weak first-half, the company is certainly going to have to work hard to meet its guidance. Management appears confident that improved GoGetta contract yields and improved cost management will help, as will the continued strong performance of its hospitality segment.

But judging by the market's reaction today, I think most investors are like myself and quite doubtful that the company will be able to turnaround its performance in such a short period of time.

So for this reason I would suggest investors give the embattled company a wide berth for the time being and focus on other shares in the industrials sector such as Reliance Worldwide Corporation Aus P Ltd (ASX: RWC) and Reece Ltd (ASX: REH).

The post Why the Silver Chef Limited share price CRASHED again today appeared first on The Motley Fool Australia.

The property, utilities and industrials sectors are leading the market higher today thanks to strong performances from a number of interest rate sensitive shares.

Six shares that have been particularly strong performers today, include:

Syrah Resources Ltd (ASX: SYR)

Shares of Syrah Resources have spiked around 7.5% today mainly on the back of speculation of a possible takeover bid from South32 Ltd (ASX: S32). Shares of the graphite miner have been under serious pressure this year, with the shares falling from $6.72 in mid-June to just $2.62 earlier this month. Syrah has also been one of the most shorted shares on the ASX this year and today's move suggests some traders may be covering their positions.

Transurban Group (ASX: TCL)

Transurban shares have climbed nearly 3% today following some respite in the bond markets over the weekend. Other interest rate sensitive shares including Sydney Airport Holdings Ltd (ASX: SYD) and APA Group (ASX: APA) are also enjoying gains of more than 2.5% today as investors pile back into some of the most popular shares that have been beaten-up over the past few months.

Silver Chef Limited (ASX: SIV)

Shares of Silver Chef have spiked around 9% today, despite the absence of any news from the company. It appears bargain hunters are stepping up to the plate following a dramatic plunge in the share price over the past month. It comes after the equipment rental company revealed it had been the victim of a co-ordinated fraud attack that was going to require a first-half impairment charge of $2.2 million.

Sky Network Television Ltd (ASX: SKT)

Shares of Sky Network have rebounded 2.8% today thanks in-part to a broker upgrade. UBS has upgraded the shares to a 'buy' after last week's savage sell-off, which saw the shares fall around 15%. The pay-tv company underwhelmed investors last Wednesday after it revealed it had suffered falling subscriber numbers for the year-to-date and this was likely to result in FY17 EBITDA declining 5%-7%.

The post Market Movers: Why these 6 shares are climbing higher today appeared first on The Motley Fool Australia.

Why? At a time when ASIC is clamping down on a number of sectors in the finance industry for their conduct, Silver Chef announced that it had "been the victim of a material fraud attack involving fraudulent customers working in conjunction with fraudulent GoGetta equipment vendors".

The company's GoGetta business offers funding for businesses that need larger pieces of equipment. Media reports suggest that the alleged fraud surrounds the use of fake customers purchasing fake fitness equipment and fake compressors in around 60 finance contracts worth an average of less than $65,000 per contact.

Interestingly the company suggests that it doesn't have anything to do with the broker in question, but rather it appears to be a sophisticated and planned operation.

What Now? Silver Chef is exploring all options of financial recovery through insurance and other channels but warned that the recovery process is likely to be protracted. The Company will take a once-off after-tax impairment charge of $2.2 million for the half year, resulting in earnings after tax to 31 December forecast to be between $4 million and $5 million, against $10.3 million in the previous corresponding period.

Management reported that "underlying" earnings, which strips out one-off factors such as the fraud, will be between $6.3 million and $7.3 million, down from $7.6 million a year earlier.

As more and more transactions move online, the threat of digital fraud will increase. Finance companies and brokers must remain vigilant for cases like these because insurance won't always protect or reimburse companies.

Similarly, fraud will likely attract attention from regulators, which investors don't seem to appreciate. Silver Chef now boasts a solid forward dividend yield, but investors should be aware that lower profits may mean lower distributions.

The post Silver Chef Limited plunges 11%: What you need to know appeared first on The Motley Fool Australia.

Looking at the sectors, gold was the biggest loser, dropping 2.8%, while information technology and the consumer discretionary sectors were the best performers gainers, rising 1.5% and 1.4% respectively.

That didn't help these 4 shares, which saw losses of more than 9%.

Mobile Embrace Ltd (ASX: MBE) saw its share price drop another 12.4% to 12.7 cents, following yesterday's huge fall. The mobile marketing and carrier billing company downgraded earnings guidance yesterday by around 18%. Investors appear concerned that the one-off event impacting the company may not be one-off and could impact the company down the track as well.

Integral Diagnostics Ltd (ASX: IDX) shares fell 13.5% to $1.28 after the diagnostic imaging company said there were ongoing inconsistency in referral patterns and volumes are highly volatile. The company says its volumes are up 4% in the first four months of FY2017, but slightly under their expectations. As a result, the first half of FY2017 earnings are expected to be ~10% lower than the previous years.

Silver Chef Limited (ASX: SIV) share price dropped 9.8% to $9.99. The commercial equipment rental and financing company today reported that it had been a victim of fraud, which was expected to cost the company $2.3 million – around 10% of its net profit for the FY2017 year. Silver Chef also says it expects to take several steps to prevent it happening again, but will be forced to take higher provisioning for bad debts and impairments in its GoGetta business.

Whitehaven Coal Ltd (ASX: WHC) share price dropped 9.3% to $2.54, after China relaxed working day restrictions which should see coal prices ease. Chinese officials had restricted output to cut back on pollution and perhaps to reduce supply and increase prices. Unfortunately, that saw coking coal prices quadruple and thermal coal prices soar. The move to relax restrictions could see coal supplies boom again – bad news for the coal price and coal miners like Whitehaven.

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