5 Micro-caps that will 10-bag or more in 5 years or less - September 2022 update

Yes it's that time of year to provide an update on the blog I started two years ago, and perhaps I should be embarrassed to provide this update, but I'm not. From the outset I've pointed out that I'm not tipping these shares and that micro-caps are extremely volatile and their fortunes and subsequently share prices can turn on a sixpence. We are currently in the throes of a savage bear market, and even great news is largely met with a shrug of the shoulders. Bad news is catastrophic to share prices, particularly illiquid tiddlers like these.

If you have the right mind set though, you'll see massive opportunity which only arrives once every 10 to 20 years. There are so many companies at knock down prices presently, it doesn't mean prices won't go even lower in the short term but if you have spare cash then these are the moments to start buying not selling. Anyway, without further ado here's the update. Readers of a nervous disposition might like to look away now as they may find the content disturbing. 

1) IXICO current share price 37.5p (down 46%)

Ixico is fundamentally still doing well and is on track to grow longer term. I have no major concerns with this company. It's share price was initially rocked when phase III trials with a major lucrative client were terminated and as a consequence Ixico's services on this project were scaled back significantly. This affected Ixico's growth projections for 2022 and 2023. This is a clear risk factor for Ixico, but they have and are very sensibly picking up a broader and bigger client base over time which will ensure that there is far less reliance on just one major contract. 

A recent trading update is encouraging. In year-end 2022 (end of this month), they expect EBITDA to comfortably exceed previous guidance, and their order book will exceed £15m. For 2023, they expect revenues to come in at around £7m, £5m of which has already been contracted. The company (as mentioned) has a more diversified order book, a strong balance sheet and is debt free with cash.

2) CRIMSON TIDE current share price 1.8p (down 47%)

Crimson Tide is an excellent little company that is doing exactly what it has set out to do. Currently it's investing for growth and is achieving expectations. Hence the share price has fallen by 47% over two years. Spot the sarcasm. Indeed, it reported it's interims this morning which were in-line with expectations showing revenue growth of 15.3%, and Annual Recurring Revenue (ARR) growth of 22.7%. They recently secured two significant contracts which will further contribute to revenues in the second half and most importantly to ARR.

They expect to return to profitability in 2024 since at present they are continuing to invest for growth, but with very high gross margins (currently 84.5%) it'll be worth the wait since the revenues will pretty much start to drop to the bottom line. Needless to say, with the visibility of recurring revenue streams and a strong pipeline, management are very optimistic. Client churn is negligible which speaks volumes about their offering.

3) BIOME TECHNOLOGIES current share price 52.5p (down 78%)

It was all going so well until.......Yes, a profit warning last week!! In short, they've suffered from supply chain challenges, a major project delay and a far more uncertain economic backdrop which is severely curtailing the expected ramp up in revenues for the BioPlastics division. By contrast the RF Technologies division is beginning to recover and should show a marked improvement in the second half of 2022. However, the company warned on profits for both 2022 and 2023. 

There are some interesting projects in BioPlastics including in the packaging film area, tree shelters and Home compostables, but clearly we're now looking medium to longer term.

Biome believes it has sufficient working capital for the foreseeable future, and growth is expected from 2022 to 2023 with revenues above £5m and rising, the selloff (imo) therefore is massively overdone leaving Biome on a market cap. of just £2m.

4) SRT Marine Systems current share price 29p (down 32%)

SRT has two key revenue streams, the transceivers business which is growing nicely and the systems division where major projects are promised. One of the systems projects has been confirmed this year for £40m and more large value contracts are expected imminently. So why is the share price at 29p? Largely because the company has promised imminent contracts for some time now and it does have a habit of having to raise cash from the markets at a discount.

If they do deliver the promised systems contracts and the transceivers business continues to grow then SRT shareholders should really prosper. It's a waiting game like with so many of these smaller companies.

5) TRAKM8 current share price 18p (down 4%)

In terms of share price performance Trakm8 is almost a success story compared to the above at a mere 4% down. In fairness, this is a recovery stock and a chink of light has appeared on the horizon.

Trakm8 have seen an uptick in business and recently reported a 13% increase in the number of telematics devices reporting to their servers (299,000). This is the number to look for since it translates into recurring revenues and encouragingly, they are expecting the number of devices to increase significantly in the second half of the year.

They are also streamlining the business and expect to make cost savings of £2.4m per annum. A small profit is expected this year with good growth again the year after. Microlise have confidence and recently backed the company with a loan to cover the restructuring process and provide working capital.

Has the corner been turned? We'll find out in the next six months or so I'd guess.

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In conclusion, after two years it might look like a bit of a blood bath and it has been, but largely due to sentiment rather than company performance and prospects. If you look at my previous reports, you'll see just how illiquid and volatile the share prices of these companies can be. Biome for instance was 75% up at one stage and is currently 78% down.

Market sentiment will change and so will the economic conditions, and I am optimistic that the medium to long term prospects of all 5 companies remain sound and hopefully when the tide turns (no pun intended) these will become multibaggers from here and from the prices I first recorded them at in 2020.

5 Micro-caps that will 10 bag or more in 5 years or less - September 2021 update

 It's been just over one year since I last updated this blog about the 5 companies that I have boldly predicted will 10 bag in 5 years or less. It's not a tipping sheet so thoroughly carry out your own research if any of the five companies catch your attention. Be aware that all 5 are micro-caps and listed on AIM so expect some illiquidity and often large swings in their share prices. I am an advocate of buy and hold and my holding period is often greater than 5 years.

This is the second update since my original post back in August 2020. Obviously, it's been a pretty uneventful year worldwide :-$

Sarcasm aside, for the five companies that I am covering, I'm more than happy with the progress of their respective businesses, and see nothing to alter my vision of their future prospects. I will add the caveat that absolutely nothing can be taken for granted in this game so I always remain vigilant but try to distinguish between short term disappointments and the long term prospects of a business.

So let's start. Firstly here was the original post in August 2020:-

The mouse "shares" his thoughts: 5 micro-caps that will 10 bag or more in 5 years or less (michae1mouse.blogspot.com)

and the follow up in January of this year:-

The mouse "shares" his thoughts: 2020 (michae1mouse.blogspot.com)

1) IXICO (current share price 81.5p - up 18%)

Ixico was on a real roll and up 36% when I last reported, but in March a major client stopped dosing participants in its phase III trial and open-label extension studies in Huntington's disease following a pre-planned review of the data. This led to some uncertainty re: IXICO's short/medium term revenues and order book from this client and the share price took a hit. Since the basic story remains in tact, and expectations from this particular client have now been clarified, it proved to be a buying opportunity. Strong half year results, a solid trading update in August for the full year (£1.2m EBITDA in-line with prior year), strong order book, excellent balance sheet and more contract wins have reassured and the share price has bounced back. 

This week the company gained more momentum with their first contract award from a new Imaging Master Vendor Agreement with a top 5 global CRO. The contract itself is worth greater than $750,000, but more significantly being selected as a dedicated imaging vendor is expected to significantly enhance IXICO's opportunity to partner with the CRO's client portfolio.

I'm very pleased with the progress here, and continue to envisage huge upside potential.

2) CRIMSON TIDE (current share price 3.05p - down 10.3%)

Excellent set of results released in April for year ending December 2020 with revenue up 21%, EBITDA up 22% to £946,000, cash up to £1.157m from £320,000 and a very bullish outlook. So why the slight share price fall? Simply put, the company sees a huge market opportunity in which to grow significantly, but that needs  investment and in April the company raised £6m via a placing at 3p. This is a big positive, and in the medium to long term prospects for Crimson Tide look even bigger and brighter. Crimson Tide is a hidden gem, and whilst the full benefits may take a little time to become apparent, this is a company that has gross margins of 87%. is growing long term subscription revenues and winning sizeable clients across supermarkets, rail and the NHS.

We might see their interim results this week, certainly in the not too distant future.

3) BIOME TECHNOLOGIES (current share price 410p - up 75%)

The star performer so far. Their bioplastics division is really beginning to gain traction, and the company is targeting 40% growth per annum from 2022 onwards. Ongoing delays in shipping and transportation constrained the first half of this year, although there was still some growth. However, looking forward into Q4 this year and beyond it gets very exciting with new large customers in the USA coming onboard and a strong pipeline of projects. The icing on the cake could be a pick up in orders in their RF division which has generated annual revenues of between £4m-£8m in the past and is very cash generative. A possible perfect storm for outperformance in 2022 and longer term.

4) SRT MARINE SYSTEMS PLC (current share price 41p - down 3.5%) 

Not much to say about this one since last reporting since there has been very little news. Final results were released in July and as anticipated. This company just needs to deliver on these figures:- £550m systems division validated system sales opportunity pipeline, of which £71m are very near term. I think they will, and then it gets very exciting.

5) TRAKM8 (current share price 23p - up 23%)

It's beginning to look likely that Trakm8 have not only survived after disappointing in recent years but are now  likely to prosper. They've successfully navigated the "lockdown" storms and look like a leaner outfit. They released a trading statement this week with revenues predicted to be around 19m and a break-even performance, in-line with market expectations. Next years profits are expected to be around £2m which means the market cap. looks anomalous at just £11.5m, particularly when compared to their peers. In the background we have the recently listed telematics company Microlise who hold 20% of Trakm8 and hold ambitious plans within a rapidly consolidating sector.

That's it for the update. This overall portfolio is up 20% from my first post. As stated, I'm happy that all five still retain the potential for huge outperformance and I'll update again in 6/12 months time.

Th

5 Micro-caps that will 10 bag or more in 5 years or less - January 2021 update

It's now just over 4 months since I wrote the blog "5 micro-caps that will 10 bag or more in 5 years or less":-

The mouse "shares" his thoughts: 5 micro-caps that will 10 bag or more in 5 years or less (michae1mouse.blogspot.com)

Here's the follow up blog I wrote in September:-

The mouse "shares" his thoughts: 5 micro-caps update (michae1mouse.blogspot.com)

It's still very early days, but I thought I'd provide a brief review of progress.

1) IXICO (IXI) current share price 94p (up 36%)

Ixico is the star performer so far with a current share price gain of 36%.  The share price gains have come on the back of excellent full year results and a host of new contract announcements which underpin expectations for the year ahead and add to their already strong order book.

Their full year results showed EBITDA of £1.3m (more than double the previous year),  26% growth in revenues to £9.5m (another record for the group),  superb gross margins at 67% with a strong balance sheet which boasts nearly £8m cash. The contracted order book was up 36% at £21.7m and operating cash inflow was £1.5m.

The only surprise is that the share price isn't higher. 

2) CRIMSON TIDE (TIDE) current share price 3.35p (unchanged)

Not much news since the September update other than two new contract wins and some holdings notices. Perhaps that explains the currently static share price? Probably worth repeating my original thoughts:-

Gross margins 87%. Profitable. Minimal debt. Growing long term subscription revenues. Unaffected by Covid-19. Winning sizeable clients across supermarkets, rail and the NHS. Stick some figures into a spread sheet and see what happens to their profitable growth with double digit revenue growth. 

3) BIOME TECHNOLOGIES (BIOM) current share price 220p (down 6%)

The share price has recently recovered following a share fall after they announced a discounted placing back in September. This company really should capture investors imagination this year. Basically it's in the right place at the right time, and their Bioplastics division is really gaining momentum. Results should be in line with expectations for 2020. They have an expanding list of potential new customers, particularly in the US.

Given the potential for Bioplastics and their expanding US based client roster, the market cap. at £8m is absolutely tiny. They release their full year trading update on the 28 January.

4) SOFTWARE RADIO TECHNOLOGY (SRT) current share price 39.75p (down 6.5%)

Apart from the interim results there has been very little news from the company. The interims contained no surprises. Investors are patiently waiting for news of major contracts which will be transformational for all. There should be fireworks if they can announce one or two contracts over the next three months.

5) TRAKM8 (TRAK) current share price 16p (down 15%)

Half-year results suggested that this is still very much a possible recovery play. Whilst lockdowns continue to hamper and delay their full recovery, they are surviving and will hopefully move through the gears as we begin to see an end to the current stop/start economy. 

This is the line for investors to latch on to from the November interims,  "the Group expects revenue in the second half to be significantly higher than the first half given current orders, even with a reasonable downside scenario taken into account for the ongoing impact of Covid-19."

In summary after 4 months, apart from Ixico, the share price performance of the other four companies has been fairly flat. However, most importantly I'm happy with the progress of all five, and still anticipating an excellent performance over the five year time scale.