Small Cap Favourites: Reliance Worldwide Corporation
We’ve been keeping a close eye on Reliance Worldwide since the IPO. If you haven’t heard of this company, it’s worth paying attention to these numbers. Firstly, the market cap post IPO is estimated at around $1.6bn – so we are talking about a company which isn’t exactly a small cap but in the emerging mid cap range. We’ll still consider it a small cap favourite for now because liquidity is thin and it remains under the radar from many local fund managers.
RWC is a global provider of water control systems and plumbing solutions for domestic, commercial and industrial applications. Reliance Australia is headquartered in Brisbane, and has nationwide presence with operations in Melbourne, Sydney and Perth. It holds more than 700 intellectual property patents over its products and is the premier brand for the segment. The prospectus estimates net sales this year above $530m with operating earnings at $98m. These are huge numbers with growth projected to continue at 20% next year.
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Reliance has the type of characteristics that we like. Strong position in its market, global in nature, solid revenue base but most importantly a high margin product which means that it must have key competitive advantages over the fragmented competition. These businesses tend to be great long term investments, generating cashflow and while unsexy, they do often grow into much larger organisations once they come onto the public market. One to keep on the watchlist no doubt.
Invast is very well placed to bring you some huge opportunities in the coming months. Execution costs for ASX stocks are 0.06% (6 basis points), which means for a trade with a notional exposure of AUD $10,000, the applicable commission is only AUD $6.00.
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Chief Market Analyst
Peter Esho is a member of Invast’s Investment Committee and Chief Market Analyst at Invast Financial Services in Australia. The Invast’s Investment Committee constructs professionally constructed global thematic portfolios of Direct Market Access (DMA) CFDs over highly liquid global shares and ETFs through its new PortfolioInvestor platform. Since 1960, the Invast Group has grown to become one of the largest and most successful global brokerage firms, offering state-of-the-art trading technology and unparalleled service catering to all levels of traders.
Invast Financial Services Pty Ltd (ABN 48 162 400 035) is regulated by the Australian Securities and Investments Commission and holds an AFS Licence 438283 which authorises it to carry on a financial services business in Australia.