Company Interview / Joel's small cap picks ahead of reporting season

Key points:

Fleming sees a widening valuation gap between small/micro caps and the ASX top 50 Fleetwood (ASX:FWD) viewed as a turnaround driven by core Karratha accommodation assets and portfolio simplification Frontier Energy (ASX:FHE) highlighted for its funded solar and battery project with policy‑supported revenues

Joel Fleming from Yarra Capital Management states that conditions in Australian small and micro caps are becoming attractive again. Fleming notes that over the 12 months to 30 June, micro caps outperform, largely driven by resources, but in the last six months that segment falls around 7% while the ASX top 50 rises about 5%. He views this as a valuation gap opening, creating selective opportunities ahead of reporting season, where management outlooks and earnings guidance are seen as critical.

Fleming highlights Fleetwood (ASX:FWD) as a key pick. He cites the Sea Ripple accommodation village in Karratha as a core cash-generative asset in a supply‑constrained region servicing FIFO workers and management across oil, gas, iron ore and fertiliser. Fleming notes new management is simplifying the business, exiting underperforming RV and New South Wales operations, focusing on manufactured accommodation, and has acquired an additional Karratha site from Bechtel. He links modular and manufactured accommodation to potential solutions for Australia’s housing and social infrastructure needs.

The second focus is Frontier Energy (ASX:FHE). Fleming points to its permitted W.A. solar and battery project, the Waroona Energy Project, which he says is now equity‑funded with credit‑approved debt. He emphasises revenue visibility supported by state and federal capacity schemes and grid supply, plus scalability to meet growing demand and replace ageing power stations.