Ten Small-cap Value And Growth Ideas For 2025

24th Dec '24 by Graham Neary

26 comments 5312 reads

It’s that time of year when I publish my watchlist for the year ahead.

Before that, though, I need to review how my 2024 watchlist has fared. Hopefully there are no major developments between the day of writing this (20th December) and year-end.

The stocks on the 2024 watchlist were:

A G Barr (LON:BAG)
Cavendish Financial (LON:CAV)
CMC Markets (LON:CMCX)
Mercia Asset Management (LON:MERC)
Mortgage Advice Bureau (Holdings) (LON:MAB1)
Nichols (LON:NICL)
PayPoint (LON:PAY)
Peel Hunt (LON:PEEL)
Polar Capital Holdings (LON:POLR)
Trustpilot (LON:TRST)

Many of these companies were on the 2023 list.

However, during 2023, Numis (NUM) was delisted due to a takeover, and I turned neutral on S&U (SUS). I also decided that I did not have enough conviction in the continued strong performance of MS International (MSI) to keep it on the list.

Those three stocks were therefore replaced by CMCX, PAY and POLR - they were the new entries for 2024.

Ten small-cap value and growth ideas for 2024: A Review

A G Barr (LON:BAG) (£675m) - total return 21% year-to-date.

This IRN-BRU maker was last covered in the daily report (then known as the SCVR!) back in July. Thankfully there has not been much news from BAG this year. The recent interim results showed 5% revenue growth and 8.5% adjusted PBT growth. Unfortunately the results did include £4.4m of costs under the headline “business change projects”, as the company closed its direct delivery service for retailers and integrated the energy drink company Boost.

The shares currently trade on a forward PE of 14x and I could easily leave this on the list for 2025, hoping for another solid performance. However, I am not satisfied with the CEO appointment in May 2024: it might not be this individual’s fault, but every company he has steered before has had serious troubles. White it might not all have been his fault, I prefer to back CEOs who have a career track record of good fortune.

Cavendish Financial (LON:CAV) (£38m) - total return minus 17% year-to-date

After this share treaded water in 2023, the market was disappointed in 2024 with the…

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Graham Neary

24th Dec '24

Great point Rusty! The difficulty is that it's not easy to find many new stocks where I have familiarity and more conviction in them than the members of last year's list.

Thanks gmtrader!

Thanks very much David! Yes, whenever I say total return then dividends are included.

shopping365

Another tactic that I sometimes employ is to halve my holding when it has doubled, therefore I become effectively "in it for nothing". I employed this tactic when I bought into NVIDIA in the summer of 2016. I have since slightly regretted selling half in April 2017 when it had doubled, but I retained the rest of my holding until banking some profits this year as it had become an overwhelming portion of my portfolio.

organictrader

Thanks Graham & Megan. Looking forward to getting stuck into these articles and more on Stocko over the holiday period. Wishing the whole team a very Merry Christmas and a well earned break.

doctor dave

Great results Graham for the last two years. An object lesson in being decisive and then patient.

BnB

An object lesson in being decisive and then patient.

Yes. If the companies are not worth holding for 5 years then they probably aren’t that high quality - acknowledging that there’s more than one way to make money

gmtrader

I have to echo this. I’m the last two years I have traded far less and let my winners run. I’ve gone in bigger on the higher conviction shares. And it has proven to work a lot better for me. I’ll hold my hands up to a lot of luck in timing of buys and sells, but it has worked for me this year in particular. 78% up in my sipp and in my much smaller isa, 50% up. This coming year I intend to be less exposed to risks, and going bigger on the higher stock ranking shares. (I hope).

Chris Brown

Some fantastic returns there, Graham, well done. Looking at this year's list I make it 9 of 10 that are related to the financial sector (all except Nichols). I do think there's good value to be found there. 2025's results could be "boom or bust" and quite highly correlated between the holdings.

John LA

Thanks for sharing, I notice that 5 of your picks are from the financial sector, do you think it going to be a good year for the finance sector in particular?

Thanks for the question! No, I just pick stocks that I feel I understand reasonably well and many of them are financial - I'm trying to stay inside my circle of competence.

donQ

25th Dec '24

Even more - it looks like 8 of them in the financial sector. Not a naps :)

StrawberryDreams

26th Dec '24

Great returns there.Here's to another year!Happy Xmas Graham!

Tortoise investor

Excellent result Graham, well done! And thank you for your contributions this year - you helped point me in the direction of CMC Markets (LON:CMCX) & PayPoint (LON:PAY) (after my own research of course) which were two of my best performers and I had a nice 21% total return this year.

One of the things I am thinking about over the Christmas break is how I improve my average return (my CAGR over 11 years is 11%) and the extent to which my average is poor versus US indices and some fellow investors. So I was interested in your comment 'I would be delighted if the stocks on this watchlist generated an average total return of 10%' . Do you personally regard 10% as something you target as a 'decent' return you're happy with?

BenHazz

Thanks Graham. A good advert for focusing on fundamentals rather than following the story stocks and retail favourites. It would be great to see a top 10 from some of the other writers as well as yourself.

11% over 11years... That turns 100k into 315k. I would be very content with those returns!

The Phoenix

That is a brilliant return Tortoise , if I could average that every year would be happy days indeed.

Patrickmylnetrade

27th Dec '24

Shopping if I might say, brilliant investing! you’ve over 1 bagged an investment idea and held onto the rest for 8 years to turn it into an 100 fold investment. Don’t regret taking profit at any stage if you’ve also held firm for 100fold on the remainder. Humans/investors are never perfect in timing so we mustn’t expect the perfect outcome…but to have that discipline and patients is showing strong investment credentials and risk management. I doth my cap; how many of us would have not sold at 15 or 20 times…. I suspect not many retail investors achieve 100 bagger ( we all sell too early !!) Well done to you!

this was based on looking at Google price summer 2016 NVIDIA (NSQ:NVDA) priced at one and a half dollars to todays price!

Harry Hindsight

9th Jan

Trustpilot (LON:TRST) does seem to have the field. Used to be Which but more consumer goods than 'everything else'. Slightly annoying is the sign-in / verification every time need to give a 'tip' but understandable with Chinese/Russian bots flowing around.

Certainly a good concept - I've used CheckaTrade and there is the govt Trusted Trader systems for builders. So very very useful to weed out the Cowboys and Indians.

Rusty2

You don't believe what is on Trustpilot? You don't know how it works. Anyone van leave reviews. Read previous posts about it: https://www.stockopedia.com/co...

Used someone off, CheckaTrade, dreadful, all the reviews must have been fake.

Ten small-cap value and growth ideas for 2025

It’s that time of year when I publish my watchlist for the year ahead.

Ten small-cap value and growth ideas for 2024: A Review

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Graham Neary

26 comments

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