Bursa Malaysia (KLSE) Stock Investment Portal

Recently rejuvenated Straits Inter Logistics Bhd is among his top picks.

One of the largest oil bunkering players in the country, it has successfully diversified into oil trading and bunkering services from manufacturing and trading of water and air filter products.

Bloomberg data shows the oil player’s revenue grew by a compound annual growth rate (CAGR) of 174% over the last five years.

Areca Capital Sdn Bhd CEO Danny Wong agrees that investors should focus on the fundamentals and growth of small and mid-cap players rather than the uncertainties clouding the market.

“I think there is definitely value in the small and mid-cap space amid the noises that have caused a sharp decline in the market. Investors should focus on earnings growth. If the direction is right and there is momentum, then it will be good in the long term. Our focus is on companies that manage to show consistent growth, especially in the top line, as this indicates that management is capable of growing the business,” he says.

While the balance sheet is important, Wong maintains it is not the key factor to look out for because small-cap companies might find it hard to juggle growth and a healthy balance sheet at the same time.

In the current market, tech is a potential sector that could thrive but he advises investors to look at the company’s specifics.

“While it is not possible to guarantee growth momentum, it is a healthy sign to look for. For small-cap space, investors need to identify growth stocks. You may not get it right all the time but if you invest in 10 companies and get seven right, it’ll be very good,” he asserts.