This bit of stock advice appeared last week.
2 small-cap ASX shares to handsomely reward patient investors
Ask A Fund Manager: SG Hiscock’s Rory Hunter reveals the 2 little-known stocks that will put smiles on investor faces in the long run.
PublishedAsk A Fund Manager
The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, SG Hiscock portfolio manager Rory Hunter reveals the 2 medical tech ASX shares that will reward those with enough patience.
The Motley Fool: What are the 2 best stock buys right now?
Rory Hunter: As the small companies guy, I’d probably mention two smaller caps in this space at the moment, with the caveat of course that within a rising rate environment, you’re going to get to the valuation-multiple compression. So one would have to be quite patient with the stock picks.
The first one I’d mention would be a company called Beamtree Holdings Ltd (ASX: BMT).
So Beamtree used to be known as PKS Holding, which, I think, was Pacific Knowledge Systems. Basically, it’s a technology that works — they capture, manage, and analyse and review AI [artificial intelligence] analysis to provide to decision support systems — to doctors in hospital settings.
Operating in the same space — data analytics or health IT — as the likes of Alcidion Group Ltd (ASX: ALC), Mach7 Technologies Ltd (ASX: M7T), and others.
The first thing I’d say is, Beamtree is a fantastic growth profile. We see the prospect of them getting to about $50 million of ARR [annual recurring revenue] over the next 3 to 5 years from a base of around $10 million they are now. They operate in over 20 countries, 4 continents.
From a valuation perspective, they’re trading on about 5 times ARR currently.
If you look at the wider sector, you’ll probably get valuation multiples of, from about 9 to 15 times sales. So with the growth profile, we’re protective of the functionality that they have. Customer satisfaction, they have 99% client retention. We think that they’re fantastically placed to continue to grow really strongly.
Within the healthcare industry, something that’s key to remember, is that when customers come to making a decision on buying a product, technology or anything, a lot of the time it’s about the people involved. They need to be able to trust the people that they’re buying from.
Tim Kelsey, who’s the CEO of Beamtree, he’s got a fantastic reputation in the industry. He was previously the national director for patients and information in the NHS in the UK. He’s incredibly well connected in this space and has a very reputable track record.
So bringing all of that together in a really good place.
Here is the link and the second stock tip!
https://www.fool.com.au/2022/02/08/2-small-cap-asx-shares-to-handsomely-reward-patient-investors/
I will pass this on without comment, other than to say I am not sure this is the best stick-tip I have seen in the last 12 months!
Comments welcome!
David.
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