Several small cap stocks on the receiving end of takeovers on big premiums Small cap stocks on the receiving end of takeovers

Several small cap stocks have been on the receiving end of takeovers on big premiums. This demonstrates the value on offer in this market.

market outlook from Growth Company Investor

This week it’s tempting to continue our fun at the expense of economists and media experts. We had more good economic news to confound them, with the latest business investment figures and news of Jaguar Land Rover’s plan to create a further 10,000 jobs.

However I think we’ve already made this point… several times over!

Instead I want to highlight another positive support for small cap investors – valuation.

Last week we had a handful of bids for small cap stocks. Of course takeover activity is another example of businesses being confident about the future. But more importantly, the premium prices being paid demonstrate a huge disparity between current share prices and the value trade buyers place on some businesses.

Lavendon was tipped as a Growth Company Investor income stock idea in September at 122p. It has just received a takeover approach at 205p, a 68 per cent premium.

Avesco has agreed to be acquired at a massive 125 per cent premium to its prevailing stock price. Serial disappointer Brammer is going out on a 69 per cent premium.

While Constellation Healthcare (highlighted in October’s GCI), is being taken private by a management no doubt frustrated by its public valuation.

I often hear commentators tell me that stocks are expensive. Maybe some large caps or hot growth stocks are. But these examples show there’s still lots of value kicking around in small cap land.

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