John identifies potential growth in micro-cap stocks
Findi, working in the Indian market, is highlighted as an overlooked yet promising stock
Excite Technology Services' acquisition strategy is discussed as a growth opportunity
John Athanasiou of Red Leaf Securities shares his views on potential opportunities in the smaller end of the market, focusing on micro-cap stocks. He anticipates a market rotation from large caps into micro caps, spurred by increased confidence potentially resulting from a rate cut. John feels this trend could bring positive outcomes for the micro-cap sector.
In terms of specific stock opportunities, John brings up the case of Findi, a firm focused on India. According to John, despite being somewhat under the radar, Findi's performance has significantly exceeded their initial high valuation, posting an over 300% increase following a succession of successful contract wins. John foresees potential for Findi's continued growth, given their access to the vast Indian market and their winning strategy of securing more ATM contracts.
John also highlights Excite Technology Services, a player in the cyber security realm. He appreciates Excite's growth strategy, led by Jeff Lloyd, of expanding by acquisition. Despite lackluster performance over the past few years, John cites the recent acquisition announcement of CeBIT technologies as a move that can propel the firm into profitability. He fuels his optimism with Excite's formidable resources to support continuous acquisitions. Full unedited transcript below:
0:00
Let's head to the smaller end of town now with a focus on a couple of stocks in particular for potential growth. Jonathan is joining us from Redcliffe Securities. John. Very good Friday morning to you. Uh happy happy Friday. You must be happy, given what you saw on Wall Street overnight with that rotation into the smalls.
0:20
Finally, like we've been waiting for, what, 2 or 3 years for this. So it's about time and long, um, may continue. Well, will it continue? What are you seeing there? And that doesn't, of course, necessarily apply to the local market, does it?
0:34
I think it will continue because and I think it can apply here. It'll build confidence that finally, you know, there might be a rate cut which is very, very positive for the micro-cap sector. So we do see that rotation eventually coming out of the large caps into the micro caps.
0:52
All right. Well if you've seen that opportunity love to know where you're seeing it right now. You do have a couple of stocks in mind. Now the first one I feel as though I've certainly spoken about this before, but you're saying it tends to fly under the radar. Fendi. It's got a focus in India.
1:09
Well, you know, everyone talks about, um, drone shield and rightfully so. That's had a cracking year. But what about Fendi? Like they've won up over 300%. We wrote a research report last year giving it a very high valuation, and it's exceeded that. Um, I'm going to have to get the team to sharpen their pencils, cause, um, the boys and girls at MTS axis have given a valuation of $5.43. Now, the reason why it's been so successful, um, they've met EBITDA expectations and met guidance there. The only way you could have access to the Indian financial market. And they keep on winning contracts.
1:45
Uh, so what does the future hold? Can it still build from here?
1:50
Um, based on what they've already achieved, there's no reason why this team can't keep on going.
1:57
Now, is that based on, obviously, the size of the Indian market to begin with?
2:02
Yes. Heavily based on the size of the market, it's trading on an EBITDA revenue of about ten as we speak. So there's a lot of potential upside there. So there's no reason why they can't continue with their rollout of winning more ATM contracts. I know it sounds a little bit boring. There might be a reason why it's under the radar, but, um, the share price speaks for itself. Absolutely. So let's find elsewhere. You're taking a look at Excite Technology Services ticker code
2:33
XT. And this is in cyber security.
2:38
It certainly is in cyber security. Now the reason why we like Excit is we really go about our business by backing real winners. And Jeff Lloyd is a winner and he's heavily behind excite and he's built a good team, particularly with Brian Cyber running as CEO.
2:56
As you well know, Jeff Lloyd's had his arm form in this game in building companies. So sorry. I'll repay myself in rolling out by growing via acquisition. He did it with Test Run and he's doing it now with X XT. Just I'm just trying to unpack that share price. What's what's going on there uh, with certainly over the past couple of years.
3:20
Well, to be fair, that hasn't really performed over the past couple of years. But now there's new management and they're growing by acquisition. Um, recently they've made the announcement. They're in the process of acquiring CeBIT technologies, and now that has unaudited, um, revenues of 14 million. That will push them to profitability. Now, I'll fully disclose. I know the guys at CeBIT very well. We actually use their services. Um, one of the directors is actually my older brother, and it's won by this guy named Zoran. Zoran has got a great team there. Um, great Australian migrants and secretary Zoran, um, coming from overseas, not having any English language skills. And he comes and he builds these buildings. So long may continue and I see excite running. So it's a bit on the back CV. So John are you seeing growth both organic but also acquisition as well. Absolutely. And the good thing is we've got deep pockets here. We've got Geoff Lloyd's pockets here. That's funding CeBIT and other acquisitions going forward.
FND Price at posting:
$4.63 Sentiment: Buy Disclosure: Held
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