Ahead of the news, in front of the market

small cap alphaCALLUM NEWMAN’S

THE $1 AMAZON INVESTMENT JACKPOT

Ahead of the news, in front of the market

small cap alphaCALLUM NEWMAN’S

Two Aussie Small-Cap Stocks That Could Skyrocket As Amazon

Prepares to Take on AustraliaI want you to meet Anthony Pratt. Maybe you know of him already. He’s now officially Australia’s richest man.

Do you want to know what put him up there? It’s not glamorous, exciting or even interesting.

It’s cardboard.

Anthony Pratt runs a packaging company in Australia and the United States. If you order a book from Amazon, odds are it’ll come in one of his boxes.

Amazon buys 140,000 tonnes of corrugated boxes a year…and it’s only going to get bigger.

You know Amazon’s now coming to Australia.

Pratt told a reporter in May, ‘I think I’m the only Australian businessperson looking forward to the arrival of Amazon.’

Oh, to own a packaging company as ecommerce booms!

But stop for a moment. Anthony Pratt is a clear, unequivocal example of one thing…

A company that is cashing in from Amazon’s operation.

Pratt Industries is what I call a ‘remora’ business.

A remora is a type of small fish that spends its life clinging to a host such as a whale or shark. Both benefit from this dynamic.

You can think of the smaller stocks and companies that work with (or will benefit from) Amazon in the same way.

I’ve found what I think are the two best ‘remoras’ for Australian investors to play Amazon’s arrival right now.

In fact, I actually think Anthony Pratt is wrong. There’s more than one Australian businessman happy to see Amazon arrive.

w w w.agor afinancial .com.au

Now, I’m sure you’ve read about the stocks hammered by the fear of Amazon coming to Australia. Retail stocks and retail-exposed real estate investment trusts, for example, are still reeling.

Why does no one consider the opposite case?

Clearly Amazon is going to be a boon for any company that can win business from it, or get a takeover offer.

A perfect example came last month. Amazon offered a 27% premium to shareholders in Whole Foods to buy out the US$9.4 billion grocery chain.

But let’s bring it back to Australia. We know Amazon will need warehouses for its vast fulfilment centres. Who will help build them? And once they’re built, who will help deliver their goods?

It’s actually not clear. At least to the vast majority of investors.

And that’s good news for you.

If it WAS obvious, the stocks in question would have rocketed up by now. The market prices in information like that at light speed.

That makes this report very timely.

There are two specific stocks I recommend in this report. I’ll be hunting for more as the years goes on.

I’ve also profiled some further stocks you could consider researching to take advantage of Amazon’s growing ecosystem.

They are not hard recommendations for our portfolio here at Small Cap Alpha. But they are ideas for your own research.

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So, who will get rich when Amazon arrives in Australia?

I began to think about this some months ago, by considering what makes Amazon such a ferocious competitor in the first place.

That meant focusing on what Amazon is famous for.

That’s a relentless focus on the customer, and as part of that, rapid shipping. Amazon does everything – and I mean everything – to get your order to you as fast as possible.

Amazon has set the benchmark worldwide on this.

The onus is now on every other company to do the same thing in their own industry.

We’re seeing this ‘Amazon effect’ already in some intriguing ways all over the world.

Domino’s Pizza, for example, wants to guarantee pizza delivery to you in under 10 minutes. It’s trying to develop faster cooking ovens and faster melting cheese.

McDonald’s in the US now offers delivery from 2000 restaurants using Uber. It’s recently begun to do the same here in Australia.

Every retailer in Australia is going to have to do everything it can to make sure it can compete with Amazon on shipping.

This is going to drive a prodigious investment in logistics.

And that brings me to our first Amazon jackpot play…

Amazon Investment Jackpot #1Australia presents a problem to Amazon. The company has no previous experience operating on the ground here.

We also know fast shipping is the ‘flywheel’ that drives consumer uptake of its membership and loyalty program, Amazon Prime.

Prime is the key offer to bring people into Amazon’s ecosystem and create a lifetime customer.

That means Amazon must already be analysing the best way to solve this logistic problem.

This is the first big battleground. I think there’s every chance it will use or partner with a company called GetSwift [ASX: GSW].

This is a technology start-up that provides a software solution to the infamous ‘last mile’ delivery problem.

This is the difficulty companies face getting their products to clients in a timely and efficient manner. Think of all the lost and damaged packages, unclear delivery times and inefficient handling involved in shipping.

Well, GetSwift’s ‘software-as-service platform’ gives businesses of any size an easy and affordable way to dispatch their products, optimise delivery routes and track the parcel.

And it does it all from an app. This makes clunky manual processes redundant.

It also gives both the driver and the customer real-time GPS tracking and the ability to communicate with each other. GetSwift sums up its offer like this: it can ‘dispatch like Uber, track like Dominos, and set routes like Fedex’.

The good news is this company can boom even if I’m wrong about the Amazon connection in Australia – though the company said itself it expects to benefit from Amazon’s arrival.

According to GetSwift, companies that use its software not only save on costs, they’re also seeing increased sales, repeat orders and bigger monetary values.

There are no upfront costs for any company to use GetSwift, either. They simply pay per delivery. That’s a simple and appealing proposition.

GetSwift can also tailor its algorithm to cater for specific client requests.

Using a cloud based service also gives each customer better analytics to refine their logistic operations even further. One example is how drivers can now be ranked on efficiency.

It also means each company can take back control of this ‘last mile’ in a way they can’t by using a third part contractor. They can now communicate directly with the customer.

The appeal to clients is obvious…

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499,000 Transactions in the First Three Months of 2017 AloneGetSwift is headquartered in Melbourne, but has offices in Sydney and New York.

It currently trades on the ASX for $1.03.

What GetSwift offers to you as an investor is potentially massive scale.

What do I mean by this? Think about your local petrol station. There’s only so many cars that can drive by and stop there. It’s a good business in general, but there’s a limit to how much one station can earn.

Compare that to a business like GetSwift.

GetSwift is not limited by geography at all. It can sell in any country, anytime.

The upside in earnings could be huge.

GetSwift is already operating in over 66 countries and 554 cities.

Because it’s run over the cloud, GetSwift is available wherever there is internet connectivity. GetSwift estimates the total market size is $200 billion for global delivery and couriers.

To put this growth in context: the company only listed on the stock market in December 2016. And it only began as a company in 2015, after being spun out of a separate business restructuring.

The GetSwift platform processed 39,000 deliveries in March 2016. It was 208,000 in March 2017.

Revenue was up 237% in the first half of 2017.

The potential scale of this business is big – very big.

In February the company passed one million deliveries, half of which had come in the last four months.

Geographically, GetSwift has announced deals with the following companies in 2017 alone:

• The Fruit Box Group (Australia)

• Crosstown Doughnuts (UK)

• LoneStar Texas Grill (Canada)

• Pizza Hut (Worldwide)

• CitoTransport (Australia)

• Hungry Harvest (USA)

You can see from this list that GetSwift is appealing to any business in any industry that needs or wants to deliver products, in any country.

That’s a massive market in front of the company.

Granted, there’s no indication of what these new deals mean in terms of earnings. But very few Australian companies offer such worldwide potential.

You’d think all this must be of interest to Amazon.

Amazon’s next move worldwide is highly likely to create its own logistics network and save the billions of dollars it pays to shipping companies.

It could buy GetSwift to use it, or simply to block the competition from using it.

There’s a lot to like about this stock.

Another shrewd investor like what he sees here too…

‘The Godfather of Angel Investment’ Joins GetSwiftThey call him the ‘godfather of angel investment’ and he’s now on the GetSwift board as an advisor.

He joined in March this year. His name is Sig Mosley, and he’s been the most prolific tech investor in the US southeast for the last 17 years.

He’s invested in over 120 start-ups.

He told The Australian in March that he wanted to invest in GetSwift privately, but it went public before he could get in.

Here’s what Mosley said:

‘The fact they’re already in multiple language markets, and multiple time zones, and scaling smoothly; there’s just a frictionless component to their growth that suggests they may be on a very high trajectory, with all the ingredients there.’

This gives GetSwift a guiding hand (and possible contacts) as it seeks to crack the highly competitive US market. Not to mention Sig Mosley’s general expertise in business strategy.

GetSwift also appointed Jamila Gordon as its Chief Information Officer this year. Ms Gordon had similar role previously with Cimic Limited and Qantas.

The market cap of these two is $13 billion and $9 billion respectively.

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Gordon also worked with IBM. It’s a highly credentialed staff member to oversee the GetSwift platform.

GetSwift is the Punt of 2017I hope by now you can see the potential for GetSwift to grow its business in the next several years.

Personally, it’s the most compelling small cap stock I’ve ever seen list in Australia.

It can make sales in countries all over the world, all the while maintaining a fairly fixed cost base.

All the negativity about Australia you read – most of which I disagree with anyway – does not apply to this company. It doesn’t matter what the Reserve Bank does, or the east coast property market, or Australia’s GDP.

It can do deals with major companies. It can do deals with mum and dad businesses.

It is not industry specific. It is not country specific.

It’s only limitation is competition.

But such potential growth is incredibly rare to find in Australia.

GetSwift can cash in as logistic channels are rationalised and improved everywhere.

Retailers everywhere are investing in their ecommerce and delivery channel.

You can now order Gucci products in 10 cities, for example, and have the order at your house in 90 minutes.

Now, I’ve told you about the potential.

But you must be aware of the risks.

GetSwift is a high-risk stock.

It’s an early stage company, with a relatively inexperienced CEO, Joel McDonald (the founder) at the helm.

It’s also operating in a very competitive market, with a standalone product. Any threat to its technology, client base or platform and it could dive.

Like any small company, it’s also still loss-making, as it attracts new customers and builds a recurring revenue base.

It’s only now that it’s beginning to monetise its software. Expenses still exceed cash coming in.

But I think Amazon is going to drive every company in Australia to make their delivery channel as efficient as possible.

That means upgrading to a service such as GetSwift’s.

In fact, this is yet another reason why I wouldn’t be at all surprised should they get taken over by Amazon at some point.

Sounds exciting, right?

And it is.

But that said, there are two specific risks you should understand (alongside normal business and share market risks) before staking any of your speculative capital on this stock.

I’ll run through those now…

Risk #1I first wanted to recommend GetSwift when it was trading for around 48 cents.

It is now about double that.

I’ve watched it keep going up while my publisher, Agora Financial Australia, did the necessary preparation to launch Small Cap Alpha.

The market is becoming more and more excited by this stock. That’s because any day could bring a new deal announcement.

In general, I have no problem recommending a stock making new highs. I also believe the deals GetSwift has announced this year justify the rise in the price, not to mention its potential in general.

However, you have to be aware that the recent price rise is stretching the stock further and further from GetSwift’s actual cash earnings.

The original IPO offer price for GetSwift was 20 cents per share. I’ve been following it since then. It’s already up 400% in the seven months since listing.

However, such is the potential scale of its software, I believe GetSwift could quite possibly go up another 500–1,000% over the next few years.

It truly believe it is a potential ‘blue sky’ stock.

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And I’m not alone in thinking this. On June 23 GetSwift announced it raised an additional $24 million in capital from institutional investors. They paid 80 cents per share.

That in itself shows that investors are willing to back them.

The company’s growth forecasts are ambitious and aggressive: it wants to grow transaction volume 50 times within three years.

Hopefully they smash this target.

However, the major risk lies here: should any of this potential growth be brought into question, the stock could fall from these high levels, perhaps even by half.

That might be an amazing second buying opportunity. Or not. We’ll judge it then, if it happens. But it’s a possibility you need to know about. If that kind of down-move worries you in general, don’t have a punt.

Only invest if you’re prepared for this volatility.

On the day of the recent capital raising announcement, for example, GetSwift rose around 15%. On 27 June, it fell over 10%.

Small cap stocks aren’t for the faint of heart.

Having said that, any day and you might wake up to see the company has signed a new deal with a major company…or earnings have spiked from some of the deals it’s already done.

An example of this kind of price spike came earlier in the year.

GetSwift announced a deal with the Commonwealth Bank…

At one point it was up 60% on the day!

And this is my point…

GetSwift is a stock that can easily rise 50% in a day from a bullish announcement…or fall 50% in day from a negative one.

We’re speculating here that GetSwift can continue to announce deals that will drive the price higher.

In the longer term, I believe it will grow into an absolutely massive company.

But it’s still early days. There will be big price swings in the meantime.

If that doesn’t suit your temperament, save your money for a more conservative recommendation.

Risk #2This second warning does not relate to the business model for GetSwift, but for you as an investor.

Because GetSwift only listed this year, a lot of the company stock is still under ‘escrow’.

This is where directors and others issued with stock are forbidden to sell it in the market for a period of time.

Currently, only 58% of the original issued stock of the company is available to trade.

This means GetSwift is relatively ‘illiquid’, or not as easy to buy and sell as a much larger stock. You can’t always get in and out at the price you want. This adds an extra layer of risk to holding the stock.

This can be become especially acute if GetSwift moves in a rapid way as the market becomes either very bullish or very bearish.

Often in small cap stocks buyers can dry up, and you run the risk of taking a heavy loss, percentage wise, if trying to sell.

So adjust your position size accordingly. Don’t go too heavy in illiquid stocks.

However, the potential around GetSwift is so compelling you do want to position for the upside. As I said, this is the most attractive small cap stock I’ve ever seen list on the ASX.

If you’re happy to accept the potential on offer, and have considered the key risks above:

ACTION TO TAKE: BUY GETSWIFT [ASX: GSW] up to $1.20 If the stock trades above this, DO NOT BUY IT. I recommend putting no more than 5% of your risk capital into any one small cap stock.

That brings me to your second play on this Amazon trend…

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Amazon Investment Jackpot #2Amazon made a division in 2003 that now has US$10 billion in annual sales.

It came about almost by accident. It’s now big enough to be a separate company.

It’s called Amazon Web Services (AWS).

You know it as the cloud.

The ‘cloud’ is a term you hear bandied about a lot. But it doesn’t really describe anything meaningful, unless you look it up.

At the most basic level, the term ‘cloud’ describes any internet-based service.

Amazon Web Services (AWS) pioneered selling and renting the computing infrastructure to make cloud-based services happen.

AWS provides things like raw computing power, data storage and analytics. Then its clients can simply run whatever applications they sell on top of this. AWS is the biggest provider globally by far.

Companies all over the world now use AWS. Perhaps the most famous customer of AWS is Netflix, but NASA and the CIA are clients too.

Here’s the benefit. Companies don’t have to invest in a heap of hardware to get going any more. They can just use AWS.

This is a boon for start-ups and small companies everywhere.

AWS now has competition, but it’s bigger than the next three put together —Google, IBM and Microsoft.

Amazon has huge margins from this section of its business, because the cloud is booming.

More than $1 trillion in IT spending is estimated to be affected by the shift to the cloud in the next five years.

Jeff Bezos described the cloud this way:

‘The cloud is providing all of us with unbelievable opportunities to reinvent our businesses, add new customer experiences, redeploy capital to fuel growth, increase security, and do all of this so much faster than before.’

Well, there’s one Aussie company in particular that’s booking huge revenue growth from an industry shift to this space...

Take Your Portfolio into the Cloud With This Small Cap StockThe company I’m talking about is called Class Limited [ASX: CL1].

Class is a small cloud based software company. It has a market cap of $353 million. It currently trades for $2.98.

It listed on the ASX in 2015 after 10 years as private company.

The company’s flagship product is called Class Super. This is a reporting and admin software for Self Managed Super Funds (SMSFs).

Don’t yawn. There are about 593,000 SMSFs in Australia.

SMSFs actually have the biggest slice of Australia’s $2.3 trillion superannuation sector. They control $653 billion in assets.

And the numbers are going up.

There’s an average 2,000 new SMSFs set up every month. The number of SMSFs rose 12.8% from March 2016 to March 2017.

There’s big dollars to win here, with a bright outlook. The number of Self Managed Super Funds is expected to double over the next 15 years.

Accountants, auditors and financial advisors use Class Super to run everything they need to from a single system on behalf of their clients. This means Class has a professional target market, and helps makes these businesses more efficient. That’s a good thing!

Class Super takes the tedious use of Excel spreadsheets and data entry or less efficient legacy desktop programs, and streamlines the whole process in a fast and secure way.

It provides constant data feeds to keep all the financial data and reporting current. It can also provide regular updates and improvements to the platform.

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If there’s one thing we know about Super, it’s that there’s nothing simple about compliance and the regulatory rules that go with it. Class simplifies this as much as possible.

This is now becoming more important. New regulations brought in from July 2017 mean super fund trustees need to report the incomings and outgoings more regularly. This is once they’re in the pension phase. Asset values may soon need to be reported on a real times basis, too.

That puts a competitive moat around Class Super.

It was first to market with a cloud based product in this sector. It’s now the clear leader. It has two thirds of the current cloud market for SMSF software.

And it just keeps racking up hotshot statistics…

Class Won 80% of the Cloud Market in 2016When Class listed in 2015, it had a 16% market share of self managed super funds.

Now that’s gone up to 24%.

Class Super had 90,058 billable portfolios in December 2015. As of March 2017, Class Super now has 132,783 portfolios.

That’s an increase of 47% in under 18 months.

Sales figures released this year in the March quarter were a company record for that period.

And when customers come on board to Class, they don’t leave. The retention rate on its billable portfolios is 99.8%.

Class Super has won an industry award for best SMSF software three years in a row.

Class has a subscription based business model known as ‘software as service’. It charges a license fee per portfolio. This gives it a constant stream of cash coming in.

The good news is that this shift to the cloud still has a long way to run. Class estimates that 70% of the addressable market is still using a desktop solution.

That gives Class Super a long runway to continue to keep growing and gobbling up new clients.

Class is not only growing alongside this expanding market, it’s taking market share off its competitors.

A Chance to Double its Existing Business Now here’s where Class as a company becomes even more compelling for you as a small cap speculator…

In October 2015 the company launched a new product called Class Portfolio. It’s similar to Class Super. It’s an investment management software package, but for the non-SMSF sector.

If you’ve invested for a while, you’ll know how tedious it can be to keep track of your trades, brokerage costs and tax liabilities. Class Super streamlines all this and does the calculations for you.

The next strategic move from Class as a business is growing Class Portfolio in the same way as Class Super.

That means it has the latent potential to double its business over time from this product alone.

Consider that Class Super launched in 2009. It had 20,000 portfolios by 2012. A year later it had 40,000. By 2015 it had 90,000.

Class Portfolio should be able to take off in the same way. In fact, potentially even faster, considering that cloud services get better constantly and Class is a more established company.

Admittedly, there’s less urgency and regulation surrounding general investments than the superannuation sector. But only a bit, and the benefits are the same.

The early growth figures are compelling. Class Portfolio had 2,000 billable portfolios as of the annual report in mid 2016. This figure rose 22% to the end of the year –its strongest quarterly growth yet.

Class suggests that 70% of its existing client base could be potential users of Class Portfolio. That gives it ample cross-selling opportunities from customers who are confirmed buyers and already know the company.

I also like the fact Class is heavily invested in Research and Development (R&D) for the Portfolio product – over $1 million in the first half of the 2017 financial year.

That should pay off in sales growth in the future as new features make it even more compelling for buyers.

Also, should Class decided to reduce their spending on R&D, the company can gush even more cash than it already does.

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Why NOW is the Time to Buy Class LtdClass Limited shares ran hot in the first half of 2016. The stock price peaked at $4.20 in September. Class was then sold down hard.

Small caps as a sector had a tough year last year. Fund manager and former stockbroker Marcus Padley made a good comment on this. He said there is no ‘smart money’ in the market. But there sure is BIG money.

That means when the major investors – like the super funds – go into or out of a sector, watch out. It’s like a herd stampeding in one direction.

My view is major investors rotated back into the top end of the market. They pulled money out of their boutique investment managers, who became forced sellers in stocks like Class.

Any retail investors that got caught in this might have sold off their shares in June as a tax loss, too.

So this seems to me a unique and opportune time to get into a great small cap stock.

All of Class’s public announcements have been about how its business is growing strongly. The June quarter is traditionally a strong one for the company, too.

The risk is that I’m wrong about why Class has been sold down, and there’s some fundamental weakness in the company that I’ve missed.

We’re going to find out very quickly.

We’re heading into the earnings season, when most companies report their full year earnings. Class is one of them.

If I am wrong, Class could take a hit if it releases a poor announcement.

We’ll assess any announcement as it comes. Do be aware I’m recommending Class on the basis of holding it for at least the next 18 months.

It IS a concentrated bet we’re taking here.

Almost all of Class’s revenue comes from license fees on one product. Any realised threat to Class Super – reputational, practical or competitive – and the shares could dive.

Also, any significant regulation change that affects the popularity of self-managed super is a risk to Class’s business too, or at least to the market’s perception of its potential growth.

I do take comfort from the fact that the widely respected Wilson Asset Management bought into the stock in May.

Let’s drill down into the opportunity a bit further…

Class doubled the number of billable portfolios from just over 50,000 in June 2014 to just around 111,000 June 2016.

It added 17,775 portfolios in the first half of the 2017 financial year. Net profit was up 29% on the same period in 2016. Class Super is, for now, driving these numbers.

This puts the company reasonably on track as of now to double its portfolio base again by the end of July 2018 – somewhere near or over 200,000.

If Class Portfolio can take off (from a much lower base) this may rise even further.

That could potentially double the revenue Class is bringing in.

All things being equal, the share price could go up at least 50% if this happens.

Considering Class has a growing business, no debt and pays dividends too, this makes it a compelling buy.

There’s no reward without risk, but if you’re happy to invest: ACTION TO TAKE:

Buy shares in Class Limited [ASX: CL1] up to $3.20. If the price rises above this, DO NOT BUY IT for the time being.

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More Investing Ideas on AmazonStocks that work with massive companies like Amazon and Apple can make great investments.

Here’s another couple of ideas to follow, or do some further research on.

These aren’t official Small Cap Alpha recommendations – although that’s not to say they won’t be in time – more simply an introduction to further ideas you research yourself.

Idea #1 The Amazon-Backed Start Up to List in AustraliaThe first is one I’m keeping an eye on for Small Cap Alpha.

It’s called Scout Security [ASX: SCT]. Scout is due to list in Australia soon. It’s not yet trading on the market.

Scout is a US home security start up. It can be run and controlled through your smartphone. It sells in the USA only for now, but has plans for an international expansion.

Amazon approached Scout to invest in the business once it noticed the sales Scout was generating on Amazon.com. That’s a big tick in my book.

Not only is Amazon a Scout reseller, it will own approximately 2.6% once the company floats. Amazon put US$250,000 from its US$100 million Alexa fund to into Scout.

Scout is cutting the cost of home security and positioning as part of the burgeoning ‘Internet of Things’ trend.

Scout says the first connected device most homeowners install is to do with security. It sells the initial hardware for set up, and makes recurring revenue from account monitoring.

Amazon can use the power of its ecosystem to drive further sales toward Scout. The good news is that Scout’s business is not restricted to Amazon.

It will work with other smart home platforms like Google Nest. There’s more compelling evidence to suggest further research into Scout.

Stay tuned for more on this one.

Idea #2 The Power Behind Amazon’s AWS ThroneHere’s another asymmetric way of thinking about taking advantage of Amazon.

It’s tempting to think of Amazon as an online warehouse. But it’s actually the datacentre business where it’s a bigger market leader. Its Amazon Web Services (AWS) division controls 40% market share of the cloud, while ecommerce is only 11% of total retail sales in the USA.

As part of this, Amazon is pushing aggressively into Artificial Intelligence (AI). Amazon uses a lot of AI internally (for example, recommendations, inventory management, analysis of customer support) and then sells these tools to customers.

Netflix, for one, uses this. Any recommendation you’ve received from Netflix almost certainly came from an Amazon AI. AWS also offers raw computing power.

Both the raw computing power and Amazon tools are run on Nvidia [NASDAQ: NVDA] GPU chips.

Nvidia is, as of now, the best way I know to play the burgeoning trend of Artificial Intelligence worldwide.

We can also add that Amazon is facing considerable pressure from Google coming after the cloud market. Snapchat and Spotify, by way of example, use Google rather than Amazon.

AI is becoming an important choice for clients to choose between them. That means Amazon will continue to invest in AI tools, which should continue to drive demand for Nvidia’s processors.

Nvidia is a play on Artificial Intelligence more than on Amazon. But it still has a very long runway of potential growth. It’s not a small cap, and is US based, but worth your consideration if you’re happy to invest in a US big cap stock.

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Idea #3 Look Down for to See the Upside of This StockA further company to follow is Somero Enterprises [LON:SOM].

It makes patented laser machines for laying perfectly flat concrete floors.

It does this for Amazon and other major companies like IKEA and Walmart. And for an Australian flavour, Bunnings Warehouse.

Big logistic fulfilment centres need perfectly flat floors because the shelves and infrastructure built out over them are so big. Somero is the world leader in providing this.

Customers like the results because it increases their efficiency and profitability. And the building owners like it because it drops their operational costs.

Its most recent investment update was in June. The company is growing sales, both in North America (its traditional market) and worldwide. An expansion in China could be about to take off. It’s also intriguing in the context of Amazon’s aggressive plans for India. Somero may benefit.

Be warned. It’s no pure play on Amazon. I can’t even tell you what percentage of sales come from Amazon. One of my British contacts told me about the Amazon connection.

Still, I certainly think there’s potential worldwide for significant investment to flow into logistics and commercial property over the coming years.

Small Cap Alpha BeginsAs you know, Small Cap Alpha is a new research service.

I thank you for joining.

As I’ve mentioned to you previously, there’s going to be a plethora of incredible and profitable opportunities in front of us.

I’ll do everything I can to put them in front of you first.

Best wishes,

Callum Newman, Editor, Small Cap Alpha

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Sources:Anthony Pratt, Australia’s number one

Australia’s richest billionaire rules the roost

Amazon buys Whole Foods

Amazon lifts the standard for online transactions and delivery

The quest for 10 minute pizza delivery

Home delivery high on the lunch menu

Amazon’s problems in Australia start here

GetSwift expects to benefit from Amazon

The CIO who escaped Somali civil war

Will Amazon kill FedEx?

GetSwift prepares to deliver

Gucci at your door in 90 minutes

GetSwift raises 24 million

A brief history of Amazon Web Service

SMSFs lead the pack again

Fast facts about super

Super rule changes add to allure

Class super the star of smsf industry

Class super wins overall satisfaction award

The truth of the share market

Amazon backed start up heads for the ASX

Amazon experience massive growth in India

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All advice is general advice and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Calculating Your Future Returns: The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance.

Some figures contained in this report are forecasts and may not be a reliable indicator of future results. Any potential gains in this letter do not include taxes, brokerage commissions, or associated fees. Please seek independent financial advice regarding your particular situation. Investments in foreign companies involve risk and may not be suitable for all investors. Specifically, changes in the rates of exchange between currencies may cause a divergence between your nominal gain and your currency-converted gain, making it possible to lose money once your total return is adjusted for currency.

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Agora Financial Australia Attn: Small Cap Alpha, PO Box 713, South Melbourne, Victoria, 3205