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Published on Stockopedia 10/1/2024As with all our stuff, this is NOT advice, it's just Paul's personal opinions, based on the facts & figures at the time, which will change in future. Always do your own research. Some of these ideas will work, some of them won't - that is normal! I am NOT a guru!!Paul's list average YTDBenchmark: AIM All Share YTDPaul's list out-performance vs AIM
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Paul's 2024 small caps watchlist
Stockopedia stats fixed at 2 Jan 202428.6%-3.9%32.5%
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ThemeMarketTickerName & flag for Paul holding personallySectorMkt Cap £mStockopedia StyleStockRankBalance Sheet riskInvesting rationaleLive price nowMid-price at start (29/12/2023)Price change YTD733.3AXXCompany Interviews on Paul's Podcast (generally, wait until after results out)
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Turnaround/ ValueSMXXLON:CMCXCMC MarketsSpread betting294Contrarian71Stunningly good! NTAV is £326m, including £305m net working capital.Poorly performing, but shares are at a discount to its own liquid assets. So downside risk looks solidly underpinned, and upside potential in for free, when markets recover. Regulatory risks?302.0105.0187.6%8/1/2024 - Ahead of exps TU, strong Q3 (Oct-Dec), so operationally geared upside to profit.5/2/2024 - surprise news - getting rid of 17% of staff. Benefit to profit.Not approached yet
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GARPAIMLON:BKSBeeks Financial CloudCloud computing for financial exchanges63Neutral26Has been criticised for negative cashflow (as capex required up-front), and several placings. NTAV of £24m looks adequate to me.Impressive organic growth, sticky recurring revenues. Outlook indicates growth accelerating. Could re-rate in a bull market.Negative cashflow puts off some investors. Owner managed. Low StockRank.241.499.0143.8%6/2/2024 - Significant contract wins, and Canaccord raises forecasts FY 6/2025. Looking very good!DONE - 22/2/2024
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GARPAIMLON:IGPIntercedeNiche software, cybersecurity ID credential management54High Flyer71Healthy, no concerns here. Ample net cash for small, capital-light business.Shares soared in late 2023 on a major, but one-off contract win, via a partner reseller. If more contract wins follow through, this could still be cheap.193.893.0108.3%Another big contract win in US, early Jan 2024.22/3/2024 - another ahead exps beat, Cavendish raises forecasts by 4%Agreed in principle. Waiting to hear back with a date.
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ValueMCXLON:MEGPME GroupPhoto booths, launderettes, etc471Neutral81Healthy. NTAV £113m. Not sure why it holds both large cash pile, and borrowings? Net cash is £24m.Low ER 9.2x, good yield 5.6x, OK bal sht. Founder tried to buy it back. Share buybacks. Product innovation impressive.194.8125.555.2%22/2/2024 - In line FY 10/2023 Results. Positive commentary, saying more growth in profit expected in 2024. Trying to find a date with advisers.
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Value/ GARPAIMLON:RNORenoldIndustrial chains & similar79Super Stock99NTAV only £10m, mainly due to large £53m accounting deficit on pensions - a manageable issue. Using some bank debt to fund acquisitions. Overall it looks OK to me.Excellent turnaround in recent years, and sailed through pandemic & energy crisis. Now making sensible bolt-on acquisitions too. Valuation too cheap, even allowing for pension deficit. Quality business.52.035.048.6%Good update in April 2024.Previously done podcast, not yet approached again.
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GARPSMXXLON:BMYBloomsbury PublishingBook publishing384High Flyer92Very strong, last reported at £100m NTAV, with plenty of net cash.Excellent track record, strong balance sheet, broker forecasts raised several times, valuation still reasonable despite strong share price.668.0470.042.1%14/2/2024 - significantly ahead exps TU for FY 2/2024. Fantasy fiction selling v well.Not approached yet
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Value/GARPMainLON:GHTGresham TechSoftware for financial sector98Falling Star39Weak, at negative £(12)m. Not ideal, but software companies don't need strong balance sheets, so I'm not overly worried about this.Seems overlooked, with share price drifting down continuously, despite in line update, and strong profit growth track record. 163.0116.539.9%9/4/2024 - recommended bid at 163pAgreed in principle - interview after results in mid-April.
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RecoveryMainLON:ECELEurocellBuilding products, eg uPVC windows147Super Stock95Very healthy, NTAV £93m.Reasonable valuation, PER 9.9x, big yield 6.4%, and strong bal sht - despite softer trading in 2023. Decent Director buys in 2023. Recovery potential.178.0131.035.9%16/5/2024 - in line trading, despite rev down 6%. Helped by lower costs. Doubling buyback to £10m.Not approached yet
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GARPSMXXLON:ZTFZotefoamSpecialist lightweight high performance foams164Neutral86Healthy, with NTAV £105m. Note that it owns factory freeholds, worth more than bank debt. So overall it's fine. Factories well invested, with new machinery in recent years.Good qualiity business at reasonable valuation. Exclusive deal with NIKE extended. In for free is ReZorce drinks cartons project, could be big if it works.415.0346.019.9%ReZorce project seems to be going well. June 2024.Previously interviewed CEO, Paul to approach again after results.
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GARPAIMLON:MSIMS InternationalDefence/ Engineering144Neutral84Healthy. NTAV £41m. Includes £50m cash, mostly received up-front from big customers.Big orders, especially in its defence division, look transformative for performance. No broker notes, so still under the radar. Elderly owner/managers likely to sell company?1019.0875.016.5%Not approached yet
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GARPSMXXLON:PRVPorvairSpecialist filtration285High Flyer82Very healthy, NTAV £60m.Good quality growth business, at reasonable price now (historically overvalued in my view). Self-funding acquisitions. Ahead exps TU, and forecasts still look light.656.0631.04.0%5/2/2024 - good FY 11/2023 results, a bit ahead of forecast.Not approached yet
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GARPSMXXLON:BOWLHollywood BowlTen pin bowling in UK & Canada525Neutral83Low risk - favourable working capital, sits on ample cash pile.Highly cash generative, and growing business. Reasonable valuation PER 14.0x, decent divis 4.4%, plus self-funding its own expansion in UK & Canada.307.5306.50.3%Reassuring update April 2024.Not approached yet
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Value/GARPAIMLON:VLXVolexElectrical wiring products579High Flyer81$141m net debt, risen after acquisitions. NTAV modest at $58m. I think Volex is profitable & cash generative enough to handle this level of debt without worrying - providing no downturn in trading.Modest fwd PER of 11.6x doesn't reflect excellent track record, and value adding acquisitions. Scope for it to re-rate.311.9321.0-2.8%Good update in April 2024, but market doesn't seem to care!Not approached yet
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Turnaround, speculative micro capAIMLON:MEXTortillaCasual dining19Sucker Stock16Negligible NTAV. Spent cash pile on new site capex. Might need an equity raise if faster expansion desired.Remained (just about) profitable in consumer spending squeeze, also soaring costs. I suspect profits could recover as conditions improve. Overshot on the downside. Acquisition target?51.849.54.6%27/2/2024 - large trades y'day, RNS says Luke Johnson has bought 3.6%. Overhang cleared? Also Hanover increases stake.26/4/2024 - 2023 results, £1m loss, but good cashflow. Bal sht OK. New CEO (former CFO) came across well on IMC webinar. Good recovery potential in 2024 & 5.Pending
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Value/GARPSMXXLON:MACFMacfarlanePackaging manufacture & distribution186Super Stock97Adequate rather than strong, at £25m NTAV.Very good value, for a good quality, acquisitive business with a strong track record of earnings growth. Just looks mispriced. Re-rating overdue.110.0117.3-6.2%29/2/2024 - in line results. Confident in outlook. Very reasonable valuation, cheap.Not approached yet
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ValueAIMLON:HATH&TPawnbroker190Turnaround53Very strong, £149m NTAV.Low PER 6.8x, good yield 5.0%, and strong balance sheet.378.0438.0-13.7%23/1/2024 - PROFIT WARNING! 10% behind forecast, but still 40% up on LY, so not a worry. Forecast set too high! Buying opp?In line update, 16/5/2024Not approached yet
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ValueAIMLON:VTUVertu MotorsCar dealers240Turnaround79Underpinned by large freehold assets. NTAV £228m, close to mkt cap.Profit warning in late 2023, on sharp fall in used car values. However, it's cheap, PER 7.5x, yield 3.3% plus buybacks, and almost fully asset backed with NTAV. Likely to attract takeover bid, like almost all its competitors.57.871.3-18.9%Not approached yet
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Turnaround seems underwayAIMLON:IGRIG DesignManufactures & distributes celebration items (e.g. wrapping paper, cards, etc)143Super Stock83Strong, $286m NTAV. Bank debt is for seasonal trading peaks, greatly reduced in latest accounts.We gradually warmed to this turnaround situation during 2023. Seems to be achieving much improved margins and cashflow. Also trades well below NTAV, at 0.65.115.6147.5-21.7%Ahead exps update 30/4/2024 triggered +30% rebound. Now net cash. Still cheap!Not approached yet
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Speculative micro cap, special situationAIMLON:POSPlexus HoldingsOil & gas engineering22Momentum Trap37Medium-high. Only debt is recent loans from CEO, including a convertible see Oct 2022 RNS. Expect some dilution (my est. c.15%) Material uncertainty in recent going concern.Large contract wins mean FY 6/2024 forecast revenue up >600%, and a long-awaited recovery back into (small) profit. Major environmental tailwinds for proven tech that eliminates methane leaks. Schlumberger licensing deal should start to produce new revenues in 2024. Mgt own 59%. My biggest personal position, by far.14.121.0-32.9%2/1/24 - market reacted negatively to $5.2m SLB licensing deal. But cash position & dilution risk now resolved for time being, which is good!16/2/2024 - £1m+ P&A contract in Dutch N.Sea announced, encouraging.Agreed in principle. Maybe later this year? June year end.
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Turnaround?SMXXLON:HEADHeadlamFloorcoverings distributor174Contrarian66NTAV £199m, including large freeholds.Product volumes well below historic norms. Geared upside to profit in a recovery. Super-strong balance sheet with large freeholds.133.5216.0-38.2%15/5/2024 - Profit warning, H1 losses.Not approached yet
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