Apiam Animal Health (ASX:AHX) Looks Set to Run
Apiam Animal Health (ASX:APX) is an ASX small cap that investors should pay attention too. This interview with Jason McIntosh appeared on Ausbiz on 15 December, 2020
Host: Jason you have got your algorithms out there scanning the market for trends. What’s ticking the boxes right now?
Jason: I'm getting signals for stocks of all sizes, but I find the smaller ones the most interesting. These are the ones that many people don’t know, but are often fascinating businesses.
Apiam Animal Health is one such stock. It has a market cap of around $88 million, so it’s not in the All Ordinaries. I think that takes it off the radar for most people. Apiam is a veterinarian business, and by that it's not like the local vet, it's regionally focused. While they do look after domestic animals, the main focus is farm animals: the horses, cattle, sheep, poultry, and pigs. They've also got diagnostic and genetic services, so it's an all-round comprehensive veterinarian business. It has 50 sites and 150 veterinarians.
The stock listed on the market in 2015 and it had a rough start. It fell around 80% over the first four years. But that doesn't mean it's necessarily all over for the company. I see a lot of stocks having a bad start but then turn around and do well.
When you look at the fundamentals, Apiam’s gross revenues is up 6% over the last financial year. Net profit after tax is up 31%. They also have margin expansion and they're continuing to roll out their products and services.
For example, they just bought a veterinary operation in Dubbo. This is a fast growing regional area and demonstrates the company's growth strategy.
Apiam is certainly ticking some fundamental boxes. But it's come to my attention because of the share price momentum. The shares are starting to trigger the trending indicators which puts it on my radar. And I believe there’s good potential for further gains.
Here's the thing with these smaller stocks. If you get in the right ones, and you stick with them over say one to three years, then you could make some big gains. The ones that run can really run a long way. But it's all risk management. If this stock doesn't pan out, I won't be hanging around for three years to find out, it'll rotate the capital into something else.
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I'm Jason McIntosh, the creator of Motion Trader. My career began in 1991 on the trading floor at Bankers Trust. Nowadays, I trade my own systems from home in Sydney.
Motion Trader is for investors who value robust analysis, data driven entry and exit signals, commentary, and education. I use engineered algorithms to identify when to buy and sell ASX stocks. No biases or guesswork, just data driven signals.