It is interesting reading the "Brokers Picks" for 2007 in the press with a number of brokers focusing on corporate / takeover activity and stock selection as against sector selection.

The mid cap and smaller cap stocks have performed very well over the past few years and I think that this year's best performers will come from stocks with a market cap of $200m or less.

Here are several companies you might like to consider that don't appear in the "Brokers Picks"

Well know investors Stephen Tindall, Peter Maire, and more recently Todd Technologies Ltd have all taken considerable shareholdings in Provenco. The Provenco business is starting to get a more robust feel about it with the company looking to grow over the next 3-5 years.

Provenco has four operating divisions

• Vantex
• Provenco Technology
• Provenco Payments
• Retail Automation
  

Vantex

Vantex is the largest point of sale and mobile and wireless technology distribution group

Contributing 50% of the group revenue. Vantex has recently expanded into Asia with the purchase of the Identics group of companies in Malaysia and Singapore. Management is confident the Vantex business model is transportable into other markets and sees good growth prospects ahead for this division.



Provenco Technology

Provenco Technology deals primarily with EMV compliant EFTPOS payment technology. The division's ability to provide a complete package being involved in all levels of the project from technical consulting through to project governance.

The company has recently won large contracts with leading retailers, Farmers 1000 checkouts and The Warehouse 1300 checkouts.



Provenco Payments

This division deals mainly in the supply and upgrade of the EFTPOS terminals that we all use on a daily basis. Approximately one third of EFTPOS terminal conversions and upgrades have been competed, with approximately 60,000 remaining.



Retail Automation

This division supplies some 6000 petrol stations worldwide with outdoor payment solutions through the use of EMV compliant systems. The company sees increasing opportunities for selling customers a complete solution from the forecourt to the back office that includes ongoing customer support.

It appears that it takes approximately two years of relationship building to sign a new customer contract. The division is working with Keycorp to develop and distribute its SynchroPlus technology outside New Zealand.



Comment

If Provenco can continue to show that it is a company with growth prospects and the earnings become more solid rather than through large one off contracts the shareprice of Provenco has potential to increase through higher earnings and more particularly per ratio expansion. I.e. Provenco has traditionally traded on a forecast per ratio of less than 10, as the market becomes more convinced that Provenco can continue to grow profits the per could expand to 12-15 giving investors a healthy gain.

After looking for potential acquisitions for more than three years Team Talk has recently announced the acquisition of a 67% shareholding in CityLink a broadband fiber optic cable network service provider.

The holding in CityLink will give Team Talk a long term growth profile that could mean a solid re rating of the share price over the next 12 months.

• Team Talk has previously been viewed by the market as an income stock with a solid gross dividend of 10.5% but little in the way of growth prospects.
  
• CityLink has shown revenue growth of 20% for the last four years with a revenue forecast of $8.4m for 2007.
  
• CityLink has 100km of fiber optic cable in Wellington and 25km in Auckland which the company is looking to grow. The company is also involved in a fiber optic rollout in Christchurch.

Comment

CEO David Ware commented " We have very strict investment criteria: it had to be a proven business model, already in profit with excellent growth prospects, and a deal which would allow Team Talk to Maintain an attractive dividend."

Look for a market re rating once the market sees positive results from the CityLink acquisition.

A move to $3.00-$3.10 represents a 20% return

A reverse takeover by Cavotec through New Zealand listed Mooring Systems Limited will create a company with a market capatlisation of circa $300m this alone will see some degree of institutional interest as the company may be included in the NZX50 index.

Cavotec has over 450 staff, within the group there are 7 manufacturing "Centers of Excellence" and 24 sales offices. A distribution network throughout 30 countries contributes towards the current turnover of about NZ$200m

• The merger will allow Mooring Systems to fund further growth through the marketing and manufacture of mooring units. MSL will look to expand the MoorMaster range to 7 systems.
  
• The enlarged balance sheet of the new company should assist with credibility issues and open the doors to bigger potential customers.
  
• For Cavotec the benefit will be a first to market product that could change the way that ports gain operational efficiencies.
  
• Cavotec will gain liquidity via the listing and will provide better access to capital markets to expand growth.
  

Comment

Cavotec is a stock that has a solid earnings base while the merger with Mooring Systems gives the company good growth prospects.

The merger will enhance market access and "time to market" and adds on to the suite energy saving products that Cavotec can offer its customers.

The shares are not cheap on fundamentals and the market will be looking for a profit in the region of $15m however if this figure can be attained the share price should continue to appreciate.

For a number of reasons shares in NZO have found it tough going over the past six months..... Pike River float being delayed yet again ... Pike directors resignations... Oil price down from $75 to $54.....capital raisings, however.

Most brokers are still valuing NZO at $1.30 or better and the Tui field is coming on stream in another 6 months.

There are also another two wells to be drilled over the next three months.

Production from Tui and from Pike river has been forward sold to assist with project viability.



Comment

Here is a breakdown of values that I have taken from brokers reports

• Pike River Coal $80-85m
  
• Tui Oil $85-90m
  
• Kupe Gas/Oil $15-20m
  
• Exploration prospects $60-65m
  
• Cash $65m
  
• Tax losses $20m
  
• Pan Pacific $12m

Total $337
$1.32 per share

$1.09 - exploration prospects

NZO shares obviously carry some risk however with Tui coming on stream and
the Pike River transaction likely to be completed over the next few months
NZO looks set to become a portfolio stock rather than an exploration stock.

As these projects come on stream look for a re-rating.