The ASX and global markets are having a wild beginning to the year. Volatility is up, and markets are nervous as inflation fears are high. Small-cap stocks have become an essential part of an investor’s portfolio. ASX small-cap stocks have had a brilliant 2021, and some of them are still performing well.
As inflation reduces the value of money, growth becomes that much more important. This is where we think small-cap stocks become essential.
Aussie broadband is a relatively new player on the block. However, they have been around in the telecom sector, providing NBN internet to homes and businesses for over a decade. ABB listed on the ASX in late 2020.
Excellent customer support is what sets Aussie Broadband apart from Telstra, TPG, and Optus of Australia. They have been consistently gaining market share and are now the 5th largest NBN provider, Down Under. In addition to broadband services, ABB has expanded into VOIP, mobile plans, and most recently, home entertainment by partnering with Fetch TV.
The company’s main focus is NBN subscription plans and bundles to residential homes, small businesses, not-for-profits, corporate/enterprise and managed service providers.
On 20 October 2021, Aussie Broadband provided the 1Q FY22 trading update, which included an outlook of 53,000 to 60,000 broadband net additions in 2Q FY22. This range comprised 33,000 to 40,000 organic broadband net additions (through all channels) and 20,000 white label services migration. Sales during the quarter have remained strong, and organic net additions for the quarter are expected to be at the top end of the range (33,000 to 40,000).
Things are looking up for Aussie Broadband, and the outlook is positive. ABB shares are trading at $4.38 and offer great value to investors.
Lithium shares have had a brilliant run recently. CXO shares have risen over 200% in the past 6 months, carrying the lithium market’s momentum. CXO is well-positioned to be Australia’s next lithium producer, developing one of Australia’s most capital-efficient and lowest-cost spodumene lithium projects: The Finniss Lithium Project.
The Finniss Lithium Project is located 88km from Darwin Port in the Northern Territory. In 2021, Core released a Definitive Feasibility Study and Scoping Study on Finniss, the highlights of which included production of an average 173,000 tonnes per annum of high-quality lithium concentrate at a C1 OPEX of US$364 per tonne and $89 million CAPEX through simple and efficient Dense Media Separation (gravity) processing of some of Australia’s highest-grade lithium Mineral Resources, along with an initial ten-year mine-life.
The project is close to all the necessary infrastructure and resources such as power stations, gas, and rail. Another key advantage of the Finniss Project is that it does not require floatation or higher energy intensity processes. With an experienced team leading the company, CXO shares have performed extremely well.
CXO shares currently trade at $0.80 a share with a very positive outlook.
Multi-award-winning Australian technology company Calix is a team of dedicated people urgently developing great businesses, leveraging their patented technology, that delivers positive global impact. The core technology is developing more environmentally friendly solutions for water treatment, CO2 mitigation, biotechnology, advanced batteries, and more sustainable mineral and chemical processing.
Calix develops its technology via a global network of research and development collaborations, including governments, research institutes and universities, some of the world’s largest companies, and a growing customer base and distributor network for its commercialised products and processes.
In 2021, Calix re-structured the business to reflect their focus areas into 5 lines and successfully raised A$19 million via a $14 million placement and $5 million share purchase plan to accelerate the increasing opportunity across these lines of businesses.
CXL’s balance sheet remains strong with minimal debt. For the year, on the back of a 36% increase in sales revenue and continued grant funding, overall revenues increased 22% to $29.9 million. Calix continued to re-invest cash in the company’s growth while maintaining a cash-positive operating result. CXL continued its track record of success in grant funding, receiving both a Manufacturing Modernisation Fund grant of $A1 million to advance our biotechnology capability, as well as being a partner in the successful Heavy Industry, Low Emissions Technology (HILT) Co-operative Research Centre bid for A$39 million in Australian Government funding.
CXL shares trade at $5.60 with a very promising 2022 ahead.
Stocks with less than $2 billion market capitalisations are considered small-cap stocks.
The 3 stocks mentioned in the blog are amongst the top small-cap stocks on the ASX
Small-cap come with an element of risk. However, they also come with a massive upside potential that usually cannot be seen in larger, more mature companies.