Do today's results make IFG Group plc and Tracsis plc unmissable small-caps?

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Railway

In these days of political panic, with the Brexit result here and the election of Donald Trump across the ocean, many have been fleeing small-cap stocks they see as risky and have been rushing for the safety of big FTSE 100 companies. But it's surely a mistake to ignore the opportunities that smaller companies can offer.

Brexit-proof finance?

IFG Group(LSE: IFP) has a market cap of just £150m and its shares have lost 9% over the past 12 months to 145p -- a lot of the drop coming in response to its first-half report in August despite strong rises in profits and an 11% hike in the interim dividend.

Today, the financial services group, which has listings in both London and Dublin, gave us a further update. The firm provides retirement and IFA services and told us that it "continues to perform in line with management expectations" as outlined at the halfway stage. Back then Tracsis spoke of "continued market volatility as well as political and policy uncertainty in the UK" and said it expects full-year revenues to be hit by the base rate fall among other things.

But even after forecasts were downgraded to account of that, they still suggest a 5% rise in EPS to put the shares on a forward P/E of 17 with a dividend yield of 3.3%. That might not sound great in itself, but a further 18% EPS gain predicted for 2017 would drop the P/E to 14.5, and the mooted divided would yield 3.6%.

Since 30 June, IFG's total assets under management have grown 8% to £26.4bn, and are up 12% since December 2015, suggesting there's no problem with confidence among the firm's customers.

Although the effects of the Brexit vote and the subsequent economic actions have caused some trouble for IFG, I see its having a foot in Europe via its Dublin headquarters as potentially helping to offset that, and I reckon it's a small-cap that deserves further attention.

One to watch

Another small cap share in the news today is Tracsis(LSE: TRCS), a £140m company that provides "software and services for the traffic data and transportation industry."

Telling us of a "further period of solid trading," Tracsis today reported a 29% rise in full-year revenue, which beat expectations, leading to an 18% boost to adjusted pre-tax profit and a 22% lift to adjusted earnings per share. The total dividend was hiked 20% to 1.2p, which provides only a yield of 0.2% on the current 523p share price. But this is very much a share for growth investors right now rather than income seekers.

A forward P/E of more than 20 needs to be seen in the same light so what are the current growth prospects looking like for Tracsis?

Forecasts currently suggest only 3% growth in EPS by July 2017, but the longer term looks promising to me. Chief executive John McArthur spoke of having started the year by placing "solid foundations," from which the second half was "one of delivery." The firm made some key acquisitions during the year too, and a major order from a US railroad operator for the supply of Remote Condition Monitoring hardware and software could set it up for some significant international expansion.

Tracsis isn't without risk, but small-cap growth investors should take a closer look.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Tracsis. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


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