Bovine Stock Picks

Pick #4
M8 Sustainable Ltd (ASX: M8S)
mkt cap ~ $15m
Last close - $0.062

M8 Sustainable is a waste management outfit hailing out of WA. There's a few things that I like about the potential prospects for this company.
~Love the sector. Waste management, especially recycling/re-using materials is and will continue to be a major focal point of all economies going forward, including waste to energy potential.
~Two former Tox Free directors sit on the board as non-exec directors (Tox Free was bought by Cleanaway 2017for $671m, growing from a small company based out of WA to a national operation.
~Respectable investor sentiment in the segment, with rivals including Bingo and Cleanaway trading at attractive multiples for Industrial companies.
~As at June 30, the company had net assets of $20m, meaning the companies mkt cap is currently below it's NTA. Whilst this can be a warning sign, it can also serve as a sign post for valuing the company.
~Its currently lagging the overall market with no negative news out. Hasn't really made much of a recovery since March lows.
~From a probability stand point, I believe this company is more likely to double than it is to halve in value. It would be rallying from a low base and could be helped along by contract wins, progress updates, industry outlook, energy/recycling opportunities. To half would be the result of some pretty dramatic news less likely to happen. Also, these positive catalysts should be more receptive to the market for this newly minted company, as the market is keen to see it's potential.

I'll be keeping an eye on it's funding situation however. They have $4m cash left after their $20m IPO raising and had $5m operating outflow last financial year. If they can maintain funding and get their flagship Gingin facility operational and worthwhile, it could be a winner.

Pick #3
iSelect (ASX: ISU)
mkt cap ~ $42m
Last close - $0.195

Far from a growth stock, this struggling comparison site has served the market with a series of unfavourable updates and earnings downgrades in recent years, currently far from its high above $2 achieved in 2017. However, I think there is value to be found in this 'cigar butt' stock, a term coined by Warren Buffett. Whilst Berkshire have steered away from this investment style over the years due to its difficulty when it comes to scale, Buffett was able to reap great rewards from this approach in his early career. It involves purchasing shares at a 'bargain' and despite a potentially bleak outlook for the business, there may be a remaining puff in the stock to make the bargain price worthwhile. iSelect is a household name, with current net tangible assets of around $100m. I see minimal liquidity risk in this stock, and whilst the space is crowded and industry outlook uncertain, I think this company could see a sharp share price boost from a positive catalyst. It will be interesting to see how they have fared during the quarter and how demand for their services have been impacted throughout Covid. What else is interesting is that rival comparison site Compare the Market owns a substantial chunk of ISU via a related entity. They are no strangers to takeover interest either. In a June 2018 announcement, iSelect stated they 'received several unsolicited and non-binding proposals from both listed and unlisted parties in relation to mergers and change of control transactions, involving iSelect'. It had also received a takeover offer in 2015 by Providence Equity Partners. Whilst I am curious as to why these opportunities never eventuated and shareholders have been left with a dying asset, I am intrigued by the strategic nature of their assets to external parties especially given their all time low current price.

Pick #2
Atomos Ltd (ASX: AMS)
mkt cap ~ 257m
Last close - $1.36

Atomos is a video technology company who produce a suite of monitor recorder products for use in content creation. There is a major shift in the way content is made, distributed and consumed with major acceleration in consumer uptake of platforms such as YouTube and streaming services like Netflix and Amazon. Included in this shift is the accessibilty of advertisers to market video content to potential consumers through a growing channel of online options (e.g. Facebook and Youtube). Their range includes equipment suitable for amateur and professional content creators, from smart phones to cinema level. Revenue growth for FY19 was up 51% to $54m. If Atomos can continue their trajectory as a viable go to option for content creators and take advantage of industry tailwinds, they may have a very bright future.

Pick #1
Powerwrap Ltd (ASX: PWL)
mkt cap ~ $40m
Last close - $0.19

PWL is a wealth management platform provider which has been steadily growing it's FUA, currently $8.38b. They are sitting on a strong cash position with ~$17m in the bank. They generated ~ $4.8m revenue and ~$1.7m loss in the Sept 19' quarter. I think it has potential to be a quick gainer with greater upside than downside.