2010 proved to be a decent year for OSK’s Small Cap Jewels although their performance was eclipsed by the liquidity-infused rally, which benefited the bigger caps, particularly from 2H2010.
Of the 50 stocks profiled in handbook, half posted absolute returns in excess of 20%, with 49% outperforming the FBM Small Cap and FBM KLCI indices.
While the smaller caps are expected to bask in the glory their larger cap peers in 2011, investors should not ignore names with good longer term potential that are trading at attractive valuations.
OSK like small caps in the construction, property, oil & gas and consumer sectors as beneficiaries of the ETP, elections and earnings themes.
The table below are the 2010 performance of OSK Top 50 Small Jewels and performance since OSK’s Small Cap Jewels report released in April 2010.
Every beginning of a new year, The Edge Malaysia, make a recommendation on the counters to Watch for that year.
Similar to year 2010, they recommend 10 counters to look for based on its fundamental and share price valuation. The selection also taking into account the stocks liquidity and long terms return.
The Edge stock picks for 2011 are
I guess some of you like to invest in Warrants instead of normal shares. It you do, better watch out the maturity dates or you will lose your money. Below are short brief explanation about Warrants.
Warrants give the holders the right, but not an obligation, to subscribe for new ordinary stock shares at a specified price during a specified period of time. The warrants are issued by the company. Warrants have a maturity date (up to 10 years) after which they expire worthless unless the holder had exercised to subscribe for the new shares before the maturity date.
The table below shows Warrants that currently traded in Bursa Malaysia together with its maturity dates and exercise price as of 1st August 2010.
OSK Research expects companies in its top 50 Malaysian small-cap list, dubbed “50 Jewels”, to register between 5 per cent and 15 per cent growth in earnings this year, driven by their strong fundamentals, as well as a recovery in the economy.
In their 2009 small-cap list, 32 out of 50 of them having posted absolute returns of 50 to 375 per cent, outperforming the benchmark index. So I hope 2010, 50 Jewels will perform reasonably well.
OSK Research also targeted the benchmark FTSE Bursa Malaysia KL Composite Index to hit 1,465 points by year-end. It also placed a fair value of 1,580 points on the index in 2011.
The table below is the top 10 companies in OSK Small Cap 50 Jewels and their target price.