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1 | Published on Stockopedia 10/1/2024 | As 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 YTD | Benchmark: AIM All Share YTD | Paul's list out-performance vs AIM | ||||||||||||||||||||||||
2 | Paul's 2024 small caps watchlist | Stockopedia stats fixed at 2 Jan 2024 | 28.6% | -3.9% | 32.5% | ||||||||||||||||||||||||
3 | Theme | Market | Ticker | Name & flag for Paul holding personally | Sector | Mkt Cap £m | Stockopedia Style | StockRank | Balance Sheet risk | Investing rationale | Live price now | Mid-price at start (29/12/2023) | Price change YTD | 733.3 | AXX | Company Interviews on Paul's Podcast (generally, wait until after results out) | |||||||||||||
4 | Turnaround/ Value | SMXX | LON:CMCX | CMC Markets | Spread betting | 294 | Contrarian | 71 | Stunningly 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? | 302.0 | 105.0 | 187.6% | 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 | |||||||||||||
5 | GARP | AIM | LON:BKS | Beeks Financial Cloud | Cloud computing for financial exchanges | 63 | Neutral | 26 | Has 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. | 241.4 | 99.0 | 143.8% | 6/2/2024 - Significant contract wins, and Canaccord raises forecasts FY 6/2025. Looking very good! | DONE - 22/2/2024 | ||||||||||||||
6 | GARP | AIM | LON:IGP | Intercede | Niche software, cybersecurity ID credential management | 54 | High Flyer | 71 | Healthy, 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. | 193.8 | 93.0 | 108.3% | 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. | |||||||||||||
7 | Value | MCX | LON:MEGP | ME Group | Photo booths, launderettes, etc | 471 | Neutral | 81 | Healthy. 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. | 194.8 | 125.5 | 55.2% | 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. | ||||||||||||||
8 | Value/ GARP | AIM | LON:RNO | Renold | Industrial chains & similar | 79 | Super Stock | 99 | NTAV 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. | 52.0 | 35.0 | 48.6% | Good update in April 2024. | Previously done podcast, not yet approached again. | ||||||||||||||
9 | GARP | SMXX | LON:BMY | Bloomsbury Publishing | Book publishing | 384 | High Flyer | 92 | Very 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. | 668.0 | 470.0 | 42.1% | 14/2/2024 - significantly ahead exps TU for FY 2/2024. Fantasy fiction selling v well. | Not approached yet | ||||||||||||||
10 | Value/GARP | Main | LON:GHT | Gresham Tech | Software for financial sector | 98 | Falling Star | 39 | Weak, 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. | 163.0 | 116.5 | 39.9% | 9/4/2024 - recommended bid at 163p | Agreed in principle - interview after results in mid-April. | ||||||||||||||
11 | Recovery | Main | LON:ECEL | Eurocell | Building products, eg uPVC windows | 147 | Super Stock | 95 | Very 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. | 178.0 | 131.0 | 35.9% | 16/5/2024 - in line trading, despite rev down 6%. Helped by lower costs. Doubling buyback to £10m. | Not approached yet | ||||||||||||||
12 | GARP | SMXX | LON:ZTF | Zotefoam | Specialist lightweight high performance foams | 164 | Neutral | 86 | Healthy, 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. | 415.0 | 346.0 | 19.9% | ReZorce project seems to be going well. June 2024. | Previously interviewed CEO, Paul to approach again after results. | ||||||||||||||
13 | GARP | AIM | LON:MSI | MS International | Defence/ Engineering | 144 | Neutral | 84 | Healthy. 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? | 1019.0 | 875.0 | 16.5% | Not approached yet | |||||||||||||||
14 | GARP | SMXX | LON:PRV | Porvair | Specialist filtration | 285 | High Flyer | 82 | Very 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. | 656.0 | 631.0 | 4.0% | 5/2/2024 - good FY 11/2023 results, a bit ahead of forecast. | Not approached yet | ||||||||||||||
15 | GARP | SMXX | LON:BOWL | Hollywood Bowl | Ten pin bowling in UK & Canada | 525 | Neutral | 83 | Low 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. | 307.5 | 306.5 | 0.3% | Reassuring update April 2024. | Not approached yet | ||||||||||||||
16 | Value/GARP | AIM | LON:VLX | Volex | Electrical wiring products | 579 | High Flyer | 81 | $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. | 311.9 | 321.0 | -2.8% | Good update in April 2024, but market doesn't seem to care! | Not approached yet | ||||||||||||||
17 | Turnaround, speculative micro cap | AIM | LON:MEX | Tortilla | Casual dining | 19 | Sucker Stock | 16 | Negligible 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? | 51.8 | 49.5 | 4.6% | 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 | |||||||||||||
18 | Value/GARP | SMXX | LON:MACF | Macfarlane | Packaging manufacture & distribution | 186 | Super Stock | 97 | Adequate 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. | 110.0 | 117.3 | -6.2% | 29/2/2024 - in line results. Confident in outlook. Very reasonable valuation, cheap. | Not approached yet | ||||||||||||||
19 | Value | AIM | LON:HAT | H&T | Pawnbroker | 190 | Turnaround | 53 | Very strong, £149m NTAV. | Low PER 6.8x, good yield 5.0%, and strong balance sheet. | 378.0 | 438.0 | -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, 16/5/2024 | Not approached yet | |||||||||||||
20 | Value | AIM | LON:VTU | Vertu Motors | Car dealers | 240 | Turnaround | 79 | Underpinned 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. | 57.8 | 71.3 | -18.9% | Not approached yet | |||||||||||||||
21 | Turnaround seems underway | AIM | LON:IGR | IG Design | Manufactures & distributes celebration items (e.g. wrapping paper, cards, etc) | 143 | Super Stock | 83 | Strong, $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. | 115.6 | 147.5 | -21.7% | Ahead exps update 30/4/2024 triggered +30% rebound. Now net cash. Still cheap! | Not approached yet | ||||||||||||||
22 | Speculative micro cap, special situation | AIM | LON:POS | Plexus Holdings | Oil & gas engineering | 22 | Momentum Trap | 37 | Medium-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. | 14.1 | 21.0 | -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. | |||||||||||||
23 | Turnaround? | SMXX | LON:HEAD | Headlam | Floorcoverings distributor | 174 | Contrarian | 66 | NTAV £199m, including large freeholds. | Product volumes well below historic norms. Geared upside to profit in a recovery. Super-strong balance sheet with large freeholds. | 133.5 | 216.0 | -38.2% | 15/5/2024 - Profit warning, H1 losses. | Not approached yet | ||||||||||||||
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