Mader Group (ASX:MAD) Set for a Mining Upturn
Mader Group (ASX:MAD) is an ASX small cap that appears set to benefit from a mining upturn. This interview with Jason McIntosh appeared on Ausbiz on 15 December, 2020.
Host: Jason, talk to us about another company that has passed your algorithm tests.
Jason: An interesting company that’s appeared in my scans is Mader Group. Now, chances are that most people wouldn't have heard of it. Mader is one of those fascinating companies that are often hard to find. It's got a market cap of around $195 million which gets it in the All Ordinaries, but not in the ASX 300. So Mader is probably on the fringes for most people in terms of identifying it.
Mader is focused in the resources sector. They service heavy equipment like diggers, trucks, plant, and all the big stuff that makes a mining operation work. The company has 1,400 people situated in operations across Australia, Asia, the Americas, and Africa.
Mader was founded in 2005, but only listed last year. On the fundamental side, revenue is up 20% and EBIT is up 22%. The company is also paying down debt and is yielding 3%. And it’s worth noting that board members own a large portion of the company, so management and shareholders’ interests are very much aligned.
Another interesting factor is that I’ve been getting lots of momentum triggers from resource stocks in recent months. This is from BHP, RIO, Fortescue all the way down to the small and the micro caps. It’s not to say that everything with a mine is going up — you still have to find the right ones. But it is really looking like a hot sector for opportunities. I think over next few years, we could really see some interesting developments in the resources sector. The drivers could be what's happening worldwide with infrastructure and modern monetary theory.
And with all this going on, I think there's a positive backdrop in momentum for stocks like Mader. People often talk about buying the companies that sell the picks and shovels. Well, Mader is fixing the picks and shovels. So if there’s an uplift in that sector, Mader could be a good way to play it.
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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.