Small-to-mid-cap offshore & marine and oil & gas stocks could continue strong outperformance against their big-cap peers as investors rotate amid attractive valuations, DMG & Partners says.
“We like companies with strong growth profile, track record in delivering profits and management with substantial stake in the company.” It tips its top three segment picks in order of preference as Ezion, with a $2.02 target, Nam Cheong, with a $0.29 target, and Technics Oil & Gas, with a $1.28 target; it rates all three at Buy, noting they trade at 25%-50% P/E discounts to big-caps.
“We expect these stocks to continue re-rating on strong earnings growth, and higher investors’ interest in the smaller cap space. We expect Ezion and Nam Cheong to announce record quarterly core net profit in their upcoming 3Q12 results.” Technics is flat at $1.03, Ezion is flat at $1.355 and Nam Cheong is up 4.4% at $0.235.
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