eureka mention

Another excellent call from Brendon Lau, whose Uncapped 100 has been outperforming the market. His article 'Mining services isn't a disaster zone' again re-iterates his view on LCM, WDS & NRW with outperforms. I'm not going to copy the article as it's a paid subscription, however, I will give you a snippet here:

http://www.eurekareport.com.au/article/2013/11/27/small-caps/mining-services-isnt-disaster-zone

NRW Holdings (NWH) was also highlighted as a “buying” opportunity in that same article, and I continue to hold a positive view on the stock.

The civil and mining engineer is one of the most cash generative companies of its peers with a free cash flow yield of around 20% (i.e. the amount of free cash it generates for every dollar shareholders invest) and management has achieved a very impressive three-year average return on equity of over 24%.

This doesn’t mean a profit downgrade can’t be lurking in a dark corner, but I think some of that is already priced into the stock as it is trading on a 2013-14 forecast price-earnings multiple of around 6 times and is on a 11% fully franked yield.

The other good thing about NRW is it has lower write-down risk, with intangible assets worth $32.5 million on its books, which represents less than 4% of total group assets.

NRW will have to take a pretty big profit downgrade before it looks expensive and I encourage risk-tolerant investors to buy the stock at these levels.