Small-cap stocks: Killer bargains among the dreck

Business

Small-cap stocks: Killer bargains among the dreck

There are little gems to be found on the JSE – our two experts tell you how to find the winning companies

Chris Gilmour

Many analysts cover big-cap stocks, especially the top 40, but few look at the mid- and small-cap sectors. Two analysts passionate about this section of the JSE are Keith McLachlan of AlphaWealth and Anthony Clark of Small Talk Daily. They discuss how researching smaller companies differs from covering large corporations.

“It starts with looking whether the company is good quality, with a good business concept, and evaluating its downside,” says McLachlan.

He looks at niche markets, barriers to entry, earnings backed by cash flow, alignment of management incentives, sustainability and scalability – what would also be evaluated for a global group. ..

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