Other Small cap news...
Clinical Computing ticks up after revenue boost
Clinical Computing ticks up after revenue boost
- Shares in the clinical software provider Clinical Computing surged 14% after it reported a 12.5% rise in total revenue and reduced full-year losses.
- The company made a pre-tax loss of £232,632 for the year ended December 31 2009. This compares with a loss of £773,386 in 2008. Revenue for the period increased to £3.18m from £2.83m.
- The company hopes it will continue to benefit from sales of recently developed primary product lines. Company chairman Howard Kitchner said the group has “completed the majority of the significant development efforts” for these product lines.
It is one thing to spot a business opportunity, but all the hard work necessary to turn it into a successful business can come to nought if a rival is doing exactly the same.
Imagine it – you have spent years begging for the money needed to start a business, burning the midnight candle as you work on some new gizmo… gnawing your pencil down to the nib as you devise a business plan…
And then what happens? You knock on the door of your first customer and he says: “Interesting…somebody else was trying to sell me exactly the same thing only last month…”
This type of thing can happen all too easily. And it demonstrates the truth that a sustainable competitive advantage is crucial to penny share success....
The entrepreneur’s worst enemy
If you have spotted a business opportunity you are unlikely to be the only one. The real threat to any entrepreneur is the unknown. He knows what he is doing, but he does not know what everybody else is doing.
There are two reasons for this. First, understandably, entrepreneurs are secretive about their business plans. They reckon they have a great idea and do not want to share it. Second, the world is a big place. So while you may be pretty sure that nobody else in the UK is copying your idea, how can you possibly know whether this is the case in China, India or the USA?
Here is another thing. Many businesses are started up by evacuees from big corporations. They get fed up with the bureaucracy and in-fighting and choose to go it alone.
Through their industry knowledge drawn from their long years as a company man, they think they have spotted some niche opportunity that their erstwhile employer has missed.
But big businesses are not asleep at the wheel. If they see something interesting they will crank the corporate machine into action, throwing money and resources at the problem that the one-man band simply cannot match.
When I am looking at penny share companies I am always very conscious of the fact that they are telling me their side of the story. Seldom do competitors get a mention, until I make a point of asking about them. “We are not aware of any competition,” is the usual reply.
But is that the end of the story?
I cannot take it on trust that nobody else is doing exactly the same thing. Of course, I can ask around, do internet searches and that sort of thing for confirmation. There will always be a possibility, though, that a company that seems to have a great product is doing exactly the same as a hidden competitor.
A clue to a company’s competitive advantage
But there is something that can give me a degree of confidence that a company has a genuine commercial advantage. That is its level of spending on research and development.
Usually the amount spent here is revealed as a separate line in the financial accounts. One way of testing the worth of a company’s R & D effort is to count the number of patents that it has been awarded to protect its intellectual property.
One interesting company that is absolutely packed with know-how is Oxford Catalysts (OCG), which last week boasted of its 650 patents in the areas catalytic conversion and micro-reactors.
Of course, this is no guarantee of commercial success. Just because a company has patented a system for making motor cars out of cardboard does not necessarily mean that they will find a market.
The real proof of the pudding comes when a company has converted its knowledge into products that sell profitably, and then cements its position through constant research-based innovation.
One company that has pursued such a business model is Domino Printing Sciences (DNO) – which as a result has achieved 31 years of revenue growth.
How to harness the potential of R&D research
There's no one I know who attaches more importance to this use of R&D than Dr. Mike Tubbs. He picks out companies that have made it a key part of their growth strategy. And the results these companies have been achieving are phenomenal. That's why any serious investor needs to consider this sort of stock.
By the way, Mike is behind the report I've been keen to get you to read in the past couple of days. As I expected, Penny Sleuth readers have been rushing to get a glimpse of the three small cap shares Mike has focused on in the report. If you've not seen it, I recommend you do now.
Get the names of these three excellent shares here.
As you'll discover, Mike has a portfolio packed full of interesting stocks investing heavily in R&D. You can access that full list today. Any one of these could bring you outstanding gains. But there's one in particular I really like the look of…
With a market cap of under £130m, this is a tiny company. Yet Mike believes it could pull in £144m each year if all goes according to its ambitious plans. And there’s a very compelling case that says it could, as you’ll see.
And in case that “£144m a year” figure means nothing to you, how about the pure “what can it do for me” profit potential? Mike’s analysis says the share price could go up 564%. That’s enough to turn a small investment of £500 into £2,820… or £5,000 into £28,200.
Bottom line is, Mike has a great system here. I recommend that you take a look at it.
Full details – including the name of that 564% stock and the full portfolio are here.
Good investing,
Tom Bulford
For The Penny Sleuth
Mike Tubbs’ Research Investments is a regulated product issued by Fleet Street Publications ltd. Forecasts are not a reliable indicator of future results. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Please seek advice if necessary. 0207 633 3600.
P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.
