In late afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a sold gain. At the time of writing, the benchmark index is up 0.8% to 7,330.4 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are sinking:

Bell Financial Group Ltd (ASX: BFG)

The Bell Financial share price is down 6.5% to $1.67. This follows the release of the financial services company's half year profit guidance. According to the release, Bell Financial is expecting to deliver a first half profit before tax of $24 million. While this is a record, it is just a 3% increase on the prior corresponding period. The market appears to have been expecting better.

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is down 2% to 9.5 cents. This morning the lithium explorer announced the outcome of its share placement. According to the release, Sayona Mining has received strong support to raise $45 million through its placement to institutional and sophisticated investors. These funds will be raised at a 21% discount of 7.5 cents per new share.

Strike Energy Ltd (ASX: STX)

The Strike Energy share price has fallen 6% to 30.5 cents. This is despite the release of a potentially positive announcement this morning. That announcement reveals that Strike has completed production testing at its West Erregulla 4 well. The results from this testing "demonstrate similar productivity characteristics consistent with the regional Permian gas fairway wells from Waitsia and Beharra and supports the progression of the Phase 1 development."

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

The Washington H. Soul Pattinson share price is down 1.5% to $33.09. This morning the investment house said it would support the takeover offer of Australian Pharmaceutical Industries Ltd (ASX: API) by Wesfarmers Ltd (ASX: WES). Some investors may believe that Soul Patts is selling out too cheaply.

The post Why Bell Financial, Sayona Mining, Strike, & Soul Patts are sinking appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) went up by 0.4% today to 6,715 points.

Here are some of the highlights from the ASX:

Australian Ethical Investment Limited (ASX: AEF)

Australian Ethical announced its quarterly update for the period ending 31 December 2020.

It said that its funds under management (FUM) grew by another 16.9% to $5.05 billion, up from $4.32 billion at 30 September 2020.

It received net inflows of $270 million for the quarter.

The company attributed the increase to strong investment performance and strong net flows.

In the financial year to date to 31 December 2020, FUM has grown by 24.6%.

The Australian Ethical share price went up more than 1% in reaction to this.

Pro Medicus Ltd (ASX: PME)

The Pro Medicus share price went up 15% after revealing that it won a new contract in the US.

The healthcare imaging company announced that it had won a seven-year contract with Intermountain Healthcare worth $40 million.

Intermountain is the largest healthcare provider in the Intermountain West region of Utah, Idaho and Nevada.

Pro Medicus' Visage will replace the legacy PACS and other specialty systems across the 24 hospitals and more than 200 clinics. The contract includes the Visage 7 Viewer and the Visage 7 Open Archive. The Visage 7 platform will be fully deployed in the public cloud, using the Google Cloud Platform.

Planning for the rollout is to begin in the third quarter of FY21, with data migration commencing immediately by Visage's engineering team. The first sites will be scheduled to go-live shortly thereafter.

Pro Medicus CEO Dr Sam Hupert said: "This is a very important deal for us, not only because of its size and scope, it will provide us with a material footprint in Intermountain West, previously an untapped region for us. It also validates our decision to engineer Visage 7 from the ground up to be natively cloud capable, with Intermountain deploying both the Visage 7 Viewer and Visage 7 Open Archive as part of our Visage in the cloud offering, making this one of the largest cloud-based PACS implementations in the world.

"This is our fifth major contract win in six months. We believe this validates our belief that we have unique, market leading technology which, coupled with our expanded product portfolio and native cloud capability, has significantly increased our total addressable market in our key jurisdictions of North America, Europe and Australia."

Bell Financial Group Ltd (ASX: BFG)

The Bell Financial share price went up 3.6% after giving a profit update for FY20.

It said in the year to 31 December 2020 that revenue went up 18% to $299 million, funds under advice (FUA) grew 9% to $63.9 billion, net profit after tax (NPAT) rose 44% to $46.7 million and the earnings per share (EPS) went up 44% to 14.6 cents.

The company will give a full update of its result in February.

Buy now, pay later operators rise

The entire buy now, pay later industry got a boost today after global competitor Affirm jumped after its own initial public offering (IPO).

Australia's biggest player, Afterpay Ltd (ASX: APT), saw its share price grow by almost 10%, the Zip Co Ltd (ASX: Z1P) share price rose by 5%, the Sezzle Inc (ASX: SZL) share price went up 7.5% and the Splitit Ltd (ASX: SPT) share price rose 1.8%.

The post ASX 200 rises 0.4% appeared first on The Motley Fool Australia.

The Bell Financial Group Ltd (ASX: BFG) share price is rising today after the company released its unaudited full year results to the ASX. At the time of writing, Bell Financial shares are trading 1.67% higher than yesterday's closing price.

While the company will not release its full year results until February, today's release gives an overview on how the company has performed this past financial year.

What Bell Financial does

Bell Financial is an Australian-based provider of stockbroking, investments and financial advisory services. It offers its services to private, institutional and corporate clients, with a network of 15 offices across Australia, Asia, Europe and the US.

The company's operating structure is divided into three units. Bell Direct is an online trading platform that offers share market ideas and broker research. The other two units — Bell Potter Securities and Bell Potter Capital — form one of Australia's largest financial advisory services.

Market update

Earlier today, Bell Financial released its unaudited results for the full year ending 31 December 2020.

The company outlined that its revenue had increased 18% to $299 million. This was the fourth consecutive year of revenue growth for the company. Bell Financial also reported its funds under advice (FUA) total increased to $63.9 billion, 9% higher than the prior corresponding period.

Bell Financial hit the trifecta, also reporting a large rise in its net profit after tax (NPAT). NPAT was up by a monstrous 44%, coming in at $46.7 million in a year that global shares went into meltdown thanks to COVID-19. As a result the company also saw its earnings per share rise by 44%, up to 14.6 cents per share.

The company stated that its full investor presentation will be available following the release of its audited results in February.

At the time of writing, the Bell Financial share price is sitting at $1.83 per share, giving the company a market capitalisation of $590 million.

The post Bell Financial (ASX:BFG) share price rising on full year results appeared first on The Motley Fool Australia.

Magellan Financial Group Ltd (ASX: MFG) saw its share price lose 4% last week, significantly underperforming the S&P/ASX 200 Index (ASX: XJO). This was despite an AGM presentation which included a forecast that FY21 costs would remain flat. Nonetheless, Magellan's critics have expressed concern over the company's planned investment of $155 million in start up investment bank Barrenjoey.

What is weighing on the Magellan share price? 

In a report in September, CLSA analyst Ed Henning said of the investment in Barrenjoey: "At face value the investment looks questionable, given investment banks tend to trade on lower multiples versus Magellan and the investment will likely initially be loss-making, although a $155m investment for a $10bn company that is highly cash generative is only relatively small."

To illustrate further, the Magellan share price is trading at a price-to-earnings (P/E) ratio of 27, while investment banks tend to trade at a P/E of between 10 and 14.

For instance, Macquarie Group Ltd (ASX: MQG) is an diverse financial group. However, the investment banking arm is regularly in the top 3 deal makers every year. Macquarie currently trades at a P/E of 16. Another example is Bell Financial Group Ltd (ASX: BFG), a stockbroking and financial services company with an investment banking arm built in. Bell has a P/E of 12.5.

What is more, another rule of thumb metric for an investment bank is between 1 and 1.5 times revenue. Given that Magellan has paid $155 million for 40% of Barrenjoey, we know that the full valuation would be just under $400 million. Meanwhile, the start up hasn't earned a cent yet, even though they have managed to capture some top flight operators from UBS. The Magellan share price fell by 5% on the day of this announcement.

The view from Magellan

Although listed in the AGM notes as a principal investment, $155 million is modest for a 10 billion dollar company. Chair and chief investment officer Hamish Douglass is dismissive of such criticism. During the company's AGM he argued that Barrenjoey's partnership model allowed for a nimble and entrepreneurial approach, designed to "uniquely position the business in the Australian market". 

He went on to explain how the market opportunity likely extended beyond Australia and New Zealand. Moreover, that the company would boost Magellan's intellectual capital through new, highly skilled staff entering the business.

Mr Douglass added:

We are excited about the prospects for Barrenjoey and it reminds me of the early days here at Magellan… Fourteen years later, it is incredible to see what can be achieved by talented people who are aligned in a common goal, with a common purpose, backed by a strong balance sheet, and not being constrained by existing systems or processes.

Magellan has also taken a sizable stake in FinClear. An unlisted financial services company that provides infrastructure to financial planners, stockbrokers, wealth managers and fintechs. The company's technology plays a hand in at least 50% of transactions on the ASX. 

The post The Magellan (ASX:MFG) share price fell 4% last week. Here's why. appeared first on The Motley Fool Australia.

It is sometimes hard for investors to commit to ASX shares with eyewatering valuations. Buying ASX shares that are value orientated can feel more tangible with the added benefit of dividends. Here are two cheap ASX shares for those who like to stick to the fundamentals. 

2 ASX shares I think are ideal for value investors

1. Bell Financial Group Ltd (ASX: BFG) 

Bell Financial Group is an Australia-based provider of stockbroking investment and financial advisory services to private, institutional and corporate clients. Across its companies, Bell Potter Securities, Bell Potter Capital and Third Party Platform, it services over 600,000 clients with funds under advice exceeding $58.4 billion. 

In the company's half year announcement on 12 August, it announced a 7.4% increase in revenue to $129.6 million, a profit after tax of $23.5 million and $88 million net cash with no core debt. The Bell Financial share price trades at a relatively cheap price-to-earnings (P/E) ratio of just 12, despite a strong track record of growth, with a compound annual growth rate (CAGR) of 8.1% for revenue and 15.6% for NPAT between 2015 to 2019. Its consistency towers over many other ASX shares in the financials sector. The reliability of Bell Financial shares could make them a worthwhile value pick backed up by modest growth. The company also pays a generous, fully franked dividend yield of 6.20% at today's prices. 

2. Pact Group Holdings Ltd (ASX: PGH) 

Pact Group is a leading provider of specialty packaging solutions in Australasia, servicing both consumer and industrial sectors. It specialises in the manufacture and supply of rigid plastic and metal packaging, materials handling solutions, co-manufacturing services, recycling and sustainability services. 

Pact Group represents a recovery story following significant higher input costs and a one-off restructuring cost in late 2018. The company delivered a sound FY20 performance driven by solid organic growth in contract manufacturing for hygiene category items and in-crate pooling services. Its sales fell 1% to $1,809 million while NPAT improved to $92 million, up from a $290 million loss in FY19. 

The concept of Pact Group being a turnaround business is prevalent in its FY20 presentation with the business focused on transforming its Australian packaging segment, pivoting towards recycling and creating a competitive platform in the ANZ fresh food segment. 

The business estimates that by 2022, it will be the largest PET recycler in the ANZ region. It aims to use local recycled material to differentiate its packaging products to meet the increasing demand for more sustainable packaging solutions. Sticking with the theme of recycling, the business wants to establish a leading position for the supply of locally sourced recycled packaging to the fresh food segment. The company has entered into an agreement to acquire Flight Plastics NZ, a leading provider of plastic trays and containers for the fresh food segments. This acquisition will give Pact access to over 5,000 tonnes of recycled PET to sell into food grade packaging in the ANZ region.

With an improvement in earnings and a clear vision for the future, I believe Pact Group could be a turnaround ASX share for value investors.

The post 2 cheap ASX shares I like for value investors appeared first on The Motley Fool Australia.

At the time of writing, the Bell Financial Group Ltd (ASX: BFG) share price was up 7.02% to $1.22. The rise in the Bell Financial share price came after the company released a presentation which was given at the Bell Potter Emerging Leaders Conference this morning.

What was in the announcement?

According to Bell Financial Group, it successfully conducted more than 70 equity capital markets transactions this year prior to 31 August 2020, raising over $1.4 billion in new equity capital and earning $48.1 million in fees, an increase of 20% compared to the prior corresponding period (pcp). 

The company stated that it had 325 financial advisers servicing 500,000 retail, wholesale and institutional client accounts. Bell Financial Group earned $71.6 million in gross brokerage revenue in 2020 prior to 31 August 2020, an increase of 14% compared to the pcp. 

According to the company, it had consistent long-term growth in its superannuation accounts with $3.6 billion in funds under advice and $12.7 million in revenue during 2020 prior to 31 August 2020, an increase of 3% on the pcp. 

Bell Financial Group stated that revenue from its third party platform was $15.9 million in 2020 prior to 31 August 2020, a 31% increase on the pcp. The company announced that its third party trading platform had delivered $4.1 million in profit before tax in 2020 prior to 31 August 2020. Bell Financial Group had $22.2 billion in sponsored holdings, up 9% on the pcp. It had 197,000 client accounts and $220 million in client cash.

According to the company, its Bell Potter Capital division had consistent revenue and earnings growth. The company stated that it was the only non bank margin lender in the Australian marketplace. It had a loan book in 2020 to 31 August 2020 of $410 million, down 26% on 2019. Its cash book was $442 million in the year to August 2020, up 31% on the pcp. Bell Potter Capital had net revenue of $9.9 million in 2020 prior to 31 August 2020, an increase of 32% compared to the prior year. Profit before tax in 2020 to 31 August 2020 for Bell Potter Capital was $3.2 million, up 128.% compared to the pcp. 

Bell Financial Group had funds under advice of $54.4 billion in the first half of 2020, down 7% compared to December 2019.

The company had revenue of $177 million in 2020 prior to 31 August 2020, this was compared to $158 million at the same time in 2019. Bell Financial Group had net profit after tax of $23.3 million in 2020 prior to 31 August 2020 and earnings per share of 7.3 cents. Earnings per share saw an increase of 23.7% compared to the pcp.

The company had no core debt and $65.5 million in net cash at 31 August 2020.

About the Bell Financial share price

Bell Financial provides stockbroking, investment and financial advisory services in Australia to retail, institutional and corporate clients. It has been listed on the ASX since 2007.

The Bell Financial share price is up more than 154% from its 52-week low of 48 cents, however, it is down 2.4% since the beginning of the year. The Bell Financial share price is up 28.42% since this time last year.

The post Bell Financial (ASX:BFG) share price up 7% following presentation appeared first on The Motley Fool Australia.

Investors may feel like they have missed a significant buying opportunity with both the S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) bouncing back more than 30% since their March lows. While the market may continue to crawl higher, here are two ASX shares that I feel have remained dirt cheap.

2 ASX shares that are still dirt cheap

1. Money3 Corporation Limited (ASX: MNY) 

Money3 provides automotive finance for the purchase and maintenance of vehicles in Australia and New Zealand. The company estimates that 1 in every 500 vehicles in Australia and 1 in every 800 vehicles in New Zealand have current Money3 loans. Despite the economic uncertainty amidst COVID-19, the company highlighted in late April that its cash collections over Easter were superior to the prior corresponding period (PCP) and had not been materially impacted by the pandemic to date. 

Money3 believes that it is well positioned to be patient and opportunistic in M&A activity or originating new organic growth when demand returns to pre-pandemic levels. In Australia, government stimulus will have a positive impact on its customers' ability to continue paying their loans, while new loan originations are continuing to customers with income. The company's New Zealand business believes that demand for automotive finance will return as restrictions are lifted. 

In its YTD March 2020 unaudited financial results, Money3 saw revenues increase 44.4% on the PCP while normalised NPAT increased 49.2%. A 5 cent dividend was paid out following strong earnings, representing a dividend yield of approximately 5.90%. The Money3 share price trades at a relatively low price-to-earnings (P/E) ratio of just 10.4. Given its growth potential and market leading dividend, I believe Money3 is one of the cheapest ASX shares out there. 

2. Bell Financial Group Ltd (ASX: BFG) 

Bell Financial Group is an Australian-based provider of stockbroking, investments and financial advisory services to private, institutional and corporate clients. On 10 July, the company advised that it expects to report a first half 2020 profit before tax of approximately $23.5m, an increase of around 5% on the PCP. The key drivers of growth were its subsidiaries, Bell Potter Capital and Third Party Platform, delivering 120% and 140% respective increases in unaudited profit before tax ($2.4 million and $3.3 million respectively). 

I believe Bell Financial's services will continue to be highly sought after despite challenging economic conditions. Demand may be driven by factors such as increased trading volumes from all types of investors, companies requiring additional capital/capital raisings and access to financial advisory services for things such as potential M&A activity. Much like Money3, the Bell Financial Group share price trades at a P/E of just 12.08 while paying a dividend yield of approximately 6.5%.

The post 2 ASX shares that are still dirt cheap after the market rebound appeared first on The Motley Fool Australia.

Australia's S&P/ASX 200 (Index: ^AXJO)(ASX: XJO) and ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) indices finished lower on Friday.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) lower 0.33% to 7,139.00
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) lower 0.34% to 7,230.40
• AUD/USD at US 66 cents
• Gold at US$1,630.84 an ounce
• Brent Oil at US$58.71 a barrel

One of the best-performing ASX 200 shares today was NRW Holdings Limited (ASX: NWH), its share price rose 7%.

Boral Limited (ASX: BLD) reported its result yesterday and its share price increased by 5.4% today.

Coal miner New Hope Corporation Limited (ASX: NHC) suffered a share price drop of 14.25% after one of its oldest shareholders decided to dump shares.

Lithium miner Orocobre Limited (ASX: ORE) reported its result today and its share price increased by 4.2%.

Pharmaceutical company Mayne Pharma Group Ltd (ASX: MYX) was another to release its report, its share price fell 6.25% in reaction.

Resources business Sandfire Resources Ltd (ASX: SFR) released its result yesterday, its share price fell 6.3% today.

The share price of Fisher & Paykel Healthcare Corp Ltd (ASX: FPH) went up 2.8% after updating its revenue and earnings guidance.

Finally, the share price of Bell Financial Group Ltd (ASX: BFG) rose by 5% after reporting its result.

Here are some of today's top stories:    

• Where I'd invest my first $500 into ASX shares
• The 'Aussie Nasdaq' ASX All Tech Index launches today. Here's a sneak peek.
• 3 ASX dividend shares raising their dividends like clockwork
• Fund managers have been buying these ASX shares this week

The Fool investment team have identified these ASX shares that could be worth a place in your portfolio.

The post ALL ORDINARIES finishes lower Friday: 8 ASX shares you missed appeared first on The Motley Fool Australia.

Australia's S&P/ASX 200 (Index: ^AXJO)(ASX: XJO) and ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) indices finished higher on Wednesday.

Here's a short recap of the Australian market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) higher 0.36% to 6,689.80
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) higher 0.41% to 6,777.70
• AUD/USD at US 69 cents
• Gold at US$1,391.42 an ounce
• Brent Oil at US$64.77 a barrel

The best-performing ASX 200 share today was the A2 Milk Company Ltd (ASX: A2M) share price which went up 8% thanks to a broker upgrade.

However, at the red end of the ASX, the share price of Pilbara Minerals Ltd (ASX: PLS) fell almost 5% as the company suffered a broker downgrade.

The share price of Bell Financial Group Ltd (ASX: BFG) rose 7.7% after the financial company revealed its profit expectations for its upcoming report.

The Platinum Asset Management Ltd (ASX: PTM) share price is down 1.6% after revealing its funds under management (FUM) for June 2019.

The share price of Alliance Aviation Services Ltd (ASX: AQZ) increased by 2.75% with it announcing that it's buying more aircraft for its fleet.

Gold miner Evolution Mining Ltd (ASX: EVN) saw its share price fall 2.3% after providing some preliminary FY19 operating results and FY20 guidance.

The Pioneer Credit Ltd (ASX: PNC) share price is up 2.6% as it revealed its PDP liquidations for FY19.

Finally, the share price of Premier Investments Limited (ASX: PMV) was one of today's as it gained 5.3%.

Here are some of today's top stories:    

• Why mastering personal finance is just as important as investing returns for wealth
• Cash is dead: 2 catastrophic dividend investing mistakes to avoid & one share I bought
• ASX investing tips: don't repeat this common mistake
• Atlassian is worth more than Telstra and could grow bigger than National Australia Bank

The post ALL ORDINARIES finishes higher Wednesday: 8 shares you missed appeared first on The Motley Fool Australia.

This morning Bell Financial Group Ltd (ASX: BFG) reported its full-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding year.

• Net profit of $24.7 million, up 20%
• Revenue of $220 million, up 7%
• Earnings per share of 8.5 cents
• Funds under advice of $46.8 billion, down 1%
• Final dividend of 4.25 cents per share full franked
• Total full year dividends of 7 cents per share fully franked
• Bell Potter equity capital markets advisory group completed 120 transaction and raised $1.7 billion for clients

This will be a satisfying result for the stock broker and capital markets advisory business that splits its revenue streams between the likes of brokerage fees, capital raising fees, and what it calls portfolio administration service fees among other services it provides to institutional and retail clients.

The 1% drop in funds under advice over the year largely a result of the plunge in equity markets over the final quarter of 2018.

Management declined to provide guidance for 2019 given the unpredictability of equity markets and capital market advisory work likely to come its way.

The stock closed down 2.8% to 85.5 cents and is around 10% higher over the past year.

Others in the mixed financial services space include Perpetual Limited (AS: PPT) and Pendal Group Ltd (ASX: PDL), although Bell Financial Group is unique in that it primarily offers brokerage services unlike the former two.

The post Why the Bell Financial share price lost ground on its profit report appeared first on The Motley Fool Australia.

In afternoon trade the benchmark S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has given back its early gains but is still up almost 0.1% to 6,003 points.

Four shares that have not been able to follow the market higher today are listed below. Here's why they sank lower:

The Asaleo Care Ltd (ASX: AHY) share price has tumbled 5% to $1.50 after the personal care company downgraded its full-year earnings guidance. Due to the underperformance of its Feminine Care category, management expects underlying net profit after tax to be down between 7.1% and 8.7% year-on-year. Previous guidance had been for low single digit growth in FY 2018.

The Bell Financial Group Ltd (ASX: BFG) share price has fallen 7% to 68 cents. This morning the financial services company advised that major shareholder UBS would be selling its 16.5% stake. No details have been provided, other than that its Bell Potter Securities business would be acting as the broker for the sale.

The RXP Services Ltd (ASX: RXP) share price is down 7% to 64 cents following the release of a trading update. The digital services consultancy provider downgraded its full-year revenue guidance to the range of $162 million to $167 million with an EBITDA margin in the range of 14.6% to 15.1%. Previously RXP expected revenue to be $174.7 million with an EBITDA margin of 15.1%. Management does, however, remain committed to its progressive dividend policy.

The Virgin Australia Holdings Ltd (ASX: VAH) share price is down 5% to 27 cents despite there being no news out of the airline. Prior to today its shares had rallied almost 24% in just one month, which could mean that today's decline is related to profit taking.

The post Why these 4 ASX shares sank lower today appeared first on The Motley Fool Australia.

Many dividend-seeking investors are overly focused on high-yielding large cap stocks and that could prove to be their Achilles Heel as they end up with an over concentrated portfolio of stocks that typically includes the big banks such as Commonwealth Bank of Australia (ASX: CBA), insurers like Suncorp Group Ltd (ASX: SUN) and a handful of industrials.

Don't get me wrong – these are good stocks to hold for any income investor, but it can be a costly mistake not to include a select number of small cap stocks as well to better diversify risk given that the performance of large and small caps is often uncorrelated, and at times, can be inversely correlated.

Another reason why small caps with reasonably high and dependable payouts should be added to your portfolio is because they generally have a greater ability to increase their dividend payments over the short and longer term.

An example of a solid dividend-paying small cap is hospital equipment supplier Paragon Care Ltd (ASX: PGC). The trailing yield on the stock is nothing to get excited about as it's hovering around 3%, or 4.2% once franking credits are added, but its dividend has nearly doubled in three years from 1.25 cents a share in FY14 to 2.2 cents in FY16.

This means Paragon Care could potentially be producing a grossed-up yield closer to 8% over the next few years as long as it can maintain its growth momentum. Paragon Care has managed to achieve its stellar growth rates through an aggressive acquisition strategy, which saw its revenue surge to $93.4 million in FY16 from $19.4 million just two years ago, while earnings before interest, tax, depreciation and amortisation (EBITDA) has jumped to $12.1 million from $1.8 million over the same period.

Management is forecasting revenue of between $115 million and $120 million this financial year and EBITDA of $15.7 million to $16.7 million.

I don't typically like roll-up type businesses, but its track record and quality of management gives me confidence that the company can keep growing at a double-digit pace. I have spoken with its managing director Mark Simari a number of times over the years and he has proven to be a conservative manager who under promises and over delivers.

In many respects, Paragon Care reminds me of another small cap star, auto services group AMA Group Ltd (ASX: AMA), and the medical equipment supplier has plenty of growth levers to pull given the fragmented nature of the industry.

Another small cap stock that is worth considering for your income portfolio is Bell Financial Group (ASX: BFG). The stockbroking, investment and financial advisory group is trading on a trailing dividend yield of 8.8%, or around 12.6% with franking.

Bell Financial posted a very credible full year result in February (its financial year ends in December) as it managed to eke out growth in an industry that is in a retreat. What's more, the growth momentum has been sustained in the first quarter of FY17 with revenue up 16% over the same period to $43 million as pre-tax profit more than doubled to $4 million.

However, its high yield indicates that the market is sceptical about Bell Financial's ability to sustain its dividend. Could the stock be a yield trap?

The issue is that its FY16 dividend has increased 22% to 5.5 cents a share while net profit is only up a more modest 3% to $16.4 million. Further, the FY16 dividend represents a payout ratio of 88%. That is very high and investors have the right to wonder if the ratio is sustainable.

On the upside, Bell Financial's strong market position and my expectations for equity markets to remain buoyant for this year, if not beyond, gives me some confidence that management will be able to at least hold its dividend steady.

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The post 2 small-cap shares I like with big yields appeared first on The Motley Fool Australia.

Shares in junior stockbroker Bell Financial Group Ltd (ASX: BFG) are soaring today after the firm revealed it expects to reveal a full year profit above $24 million when it reports its full year results.

This would be a 9% lift above the prior year's result and as a result the shares have climbed 4% to 76 cents during afternoon trade. The group provides over the phone and online broking services to retail, institutional and corporate clients, alongside sell side investment and capital market advisory services to retail and corporate clients.

The group's core retail broking business increased revenues by 14% to $114 million for a profit before tax of $13 million in what looks a strong result. While on the other hand its institutional and capital markets business saw revenues fall 16% to $34.3 million which delivered a profit before tax of $7.2 million, down 29% on 2015. This is a disappointing result that reflects the cyclical nature of capital markets work and the competitive environment.

In terms of growth the group is also looking to grow its advice business that looks after retail clients' funds either through portfolio, cash or superannuation administration services, among others.

Value?

Bell Financial delivered 6.2 cents in earnigns per share over the 2015 financial year and could be expected to earn close to 7 cents in 2016 if you use the expected profit growth as a guide.

That means it trades on an undemanding valuation at 76 cents, with a good dividend yield. However, it remains that the group is unlikely to ever shoot the lights out while operating in a competitive environment with no real advantages.

Powerful competitors 

For example Bell Financial is competing with the retail brokerage arms of the Commonweatlth Bank of Australia (ASX: CBA) or National Australia Bank Ltd (ASX: NAB), both of which can regularly discount prices and have far bigger technology and support budgets to impress investors.

When it comes to financial services scale matters and another advantage some businesses can gain over others in the capital markets advisory space is via reputational excellence or trust that encourages potential clients to send work the large player's way even if it is for premium fees. A lot of capital markets advisory work requires substantial know how so the likes of Macquarie Group Ltd (ASX: MQG) can consistently do well via their reputation and deep pools of human resources.

For these reasons I would prefer the larger financials over the smaller ones, even if Bell Financial does appear on a cheap valuation.

The post Why the Bell Financial Group Ltd share price is soaring today appeared first on The Motley Fool Australia.

Stockbroker Bell Financial Group Ltd (ASX: BFG) released an update earlier today showing that profit before tax (PBT) was up 31% to $21.6 million for the first 10 months of 2016. The result is driven by revenue being 10% higher at $151 million, which indicates operating leverage at play.

The company's core Retail Equities division recorded 14% revenue growth to $96.6 million and generated PBT of $11.5 million. Meanwhile the higher margin Institutional Broking and Corporate Finance division registered flat revenues and PBT of $6.6 million. Results were mixed in the other three smaller divisions with revenue down 5% in Futures and FX up 25%.

The market responded well to the news with shares trading 3.6% higher earlier today, albeit on low volumes.

With a market capitalisation of $187.1 million, Bell looks to be trading on a forward price-to-earnings ratio (PER) of around 10 if you annualise its 10-month performance. It also pays an attractive 6.8% fully franked dividend.

Sounds cheap in the context of 31% profit growth, right?

Whilst this year's result sounds impressive compared to last year, investors should be aware that Bell's fortunes largely depend on the financial markets and profits can therefore fluctuate wildly. For example, in 2012 revenue fell 23.6% to $66.5 million and PBT swung from $9.3 million to a loss of $2.7 million.

Furthermore, Bell's share price is just 30% of what it was when it listed in 2007 prior to the GFC. Due to the cyclicality of the business there have been extreme peaks and troughs along the way, but the overall trend is clearly in the downward direction. Like all cyclical stocks, the best time to buy them is usually when sentiment is at its worst, but personally I tend to try to avoid them altogether.

The post Profits soar at Bell Financial Group Ltd, is it a buy? appeared first on The Motley Fool Australia.

Yesterday, stockbroking firm Bell Financial Group Ltd (ASX: BFG) announced its financial results for first half of 2016 and the market responded badly. The share price closed at $0.69, down 15.3% for the day having risen more than 30% in the week prior to the release.

Revenue rose 2.0% to $84.7 million but earnings-per-share (EPS) were down 4.3% to 2.2 cents. The company increased its interim dividends to 1.75 cents up from 1.5 cents last year and the stock currently trades on a substantial fully franked dividend yield of 6.9%.

Bell had $48.3 million in company cash at 30 June 2016 and no debt except for that used to fund its margin lending business. Finance income, which is largely generated form margin lending, rose 14.2% to $7.2 million for the period. Bell is the only non-bank margin lender in Australia and has never experienced a bad debt thanks to its conservative lending requirements.

The group owns 56.6% of the Bell Direct online broking business and the platform has been awarded Best Online Broker by the Australian Financial Review several times. The division seems to be growing strongly based on a 57.4% increase in profit attributable to non-controlling interests during the half-year but still only makes a small contribution to the group.

Bell has two reporting segments based on client type, Retail and Wholesale. Retail generates profit margins of around 5% compared with 15% for Wholesale, but is responsible for about 80% of group revenue. For the first half of 2016, Retail revenue rose 1.1% to $67.3 million but profit fell 11.9% to $3.3 million whereas Wholesale revenue increased 5.9% to $17.4 million and profit was up 24.4% to $2.7 million.

CEO Colin Bell said that the company has had a good start to the second half of the year, recording a profit before tax (PBT) of $3.7 million in July. For the period from January to July, PBT is tracking 42% ahead of last year and it looks like the second half of 2016 will be stronger than the first.

Bell has a market capitalisation of $184.4 million and so is cheap based on current earnings and dividends. However, the shares are up just 2.2% over the last five years and down 70.2% since the group was listed at the end of 2007. Stock broking is a competitive industry that is heavily exposed to market cycles and so in my view, Bell's current share price is probably about right.

The post Is Bell Financial Group Ltd a buy on its half year results? appeared first on The Motley Fool Australia.