K3 Capital (K3C:AIM) 230p

Loss to date: 18.7%

Original entry point: Buy at 283p, 24 February 2022

It has been a disappointing couple of months on the market for multi-disciplinary professional services provider K3 Capital (K3C:AIM).

The most probable cause of share price weakness is related to downbeat comments from the Bank of England about elevated risks of an economic slowdown later in 2022. This has dampened investor sentiment towards small cap firms.

However, the growth and momentum across K3’s businesses remain strong.

The company reiterated (9 May) that since reporting a strong start to the second half, trading has continued to be positive and the board remained ‘very confident’ in its outlook for the financial year to 31 May 2022.

Recent acquisitions were said to be performing in line with expectations while various bolt-on deals were also being evaluated.

K3 has built a diversified business which provides services across the life cycle of companies, from mergers and acquisitions all the way through to restructuring and insolvency services.

This should provide resilience whatever the economic weather. At the half-year stage, the company noted the restructuring division was showing signs of recovery following the removal of government support.

SHARES SAYS: This remains a buy.

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