New Year Naps - Top Stocks For 2025 With A Segue To The QVM Portfolio

1st Jan by Edward Croft

85 comments 11867 reads

Happy New Year to all subscribers! While Santa has not brought his usual rally to UK markets over recent weeks, I do find myself optimistic for 2025. Everyone is miserable about the prospects for the UK economy, but all the doom and gloom seems priced in. The UK is cheap, and the smart money has been picking up bargains with one in twenty UK stocks receiving takeover bids through the year, and international investors circling. Good quality, value stocks have been appreciating and, aside from the dismal AIM, all the major FTSE indices rose in 2024. The NAPS Portfolio ended 2024 up almost 20% over the year, significantly beating its benchmark, the FTSE All Share, which managed 6%.

We’ve now completed a full decade of the NAPS Portfolio. It’s been a wonderful journey of rather lazy, but extremely effective investing. Ten years of applying this disciplined investment process have generated 13% annualised returns, beating even the S&P 500 by only investing in UK stocks. I wrote an extensive review with lots of data visualisation from this decade of outstanding returns, which you can catch up on here.

Looking to the QVM Portfolio of the future

I’d mentioned that we might stop the NAPS Portfolio, as we are aiming to develop a more complete suite of model portfolios for subscribers. Many of you were rather dismayed, and encouraged me to continue and publish another portfolio for 2025. Your wish is my command, but let’s just say that this is under review.

We’ve learnt so much over the last ten years. Our data research projects have validated many core ideas in stock market investing, and a continued reading of third-party research has even more so. Just to illustrate the point, we know that we should sell immediately on a profit warning, that there are certain traits of stocks that make them more likely to be multibaggers, and that stocks ahead of expectations are more likely to continue in the same direction. These are all ideas I use in my own personal investing.

Should we be satisfied with the NAPS Portfolio results, when the rules are only applied once annually at a rebalance date? Can’t we develop and apply a more disciplined rule-set that can enhance returns and lower drawdowns, by consistent management on a month-to-month and week-to-week basis?…

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Paul Walton

10th Jan

Yes that's the best one but im selecting stocks with AS>20. No technology stocks either

Robert Didymus

Guess, I should have paid more attention to Edward's selection of Alliance Pharma in the Naps and not substituted my own choice of Beximo Pharmaceuticals, but I have managed to overcome my reluctance for "sin stocks" and am thoroughly enjoying all advice and successful starts to the year of Supreme, MWE, IMB and Shell, none of which I had ever previously considered. many thanks

Rusty2

I did not pick Alliance Pharma (LON:APH) does not make a profit for one thing. Debt is quite high.

transport_tycoon

The more the pious ESG-ers avoid the sin stocks, the greater the return for the sinners.

Johnl

But don't tell 'em...

Cancun

Los Angeles just the latest climate related disaster ... ? Something needs to change...

It is going to get worse, with Trump in charge.

The Phoenix

Although not a climate change denier they think the fires were started deliberately, my house nearly burnt down when a wheat field behind me was set alight by idiots throwing away a disposable bbq in 2022, two of my neighbours houses were burnt down completely my entire garden was destroyed but house was 99% okay although all rear window facias were melted.

We needed ten fire engines to get it under control, we all had to evacuate for six hours to the local community centre I went back later to see if the house was still standing thankfully it was. I thanked a fireman and got chatting and he said 90% of these types of fires they dealt with as a result of dry wheat/grass were started deliberately in UK.

The frightening thing is the speed these things move at I live in an old house with a long garden when I saw what was happening I ran in to tell my son we have to leave now this took 2-3 minutes when I came back outside the fire was another 10-15 metres up my garden it was like what you are seeing in LA I had a hedge of mature confiers about 20 meters long these were utterly ablaze in about three minutes, proper scary stuff.

The other thing was even after the fire brigade had got it under control we were having to go round the garden with a hose for another 3-4 hours afterwards as small fires kept braking out again.

The field behind us had firemen checking it for a week as even though they put the fire they told us they knew fire was still burning under the soil which I imagine for the poor people of LA will be a huge challenge given the area to cover that might still have fires burning beneath the earth.

We were fortunate it happened in the daytime not 2am in the morning when we were asleep as given the speed it all happened it would probably have been curtains for us.

If they find that someone has started those fires near LA deliberately it should be life imprisonment.

Wow scary stuff Phoenix... glad that you all emerged unscathed...

Agreed re imprisonment, but I'm struggling to believe that they were all deliberate... and even if there were, sadly the fires have been exacerbated by the extreme weather conditions...

11th Jan

That's it Cancun the summer we had that year was bone dry and as we all had a lot fencing panels it ate through them at speed , I can remember it raining ash down on me and was difficult to see due to the smoke obviously compared to the poor people of LA it was small beer.

I agree not all will have been started deliberately and its a problem you can only see getting worse/happening more often moving forward.

Wheeler1

I've re-modelled most of my portfolio over the last couple of weeks based on Ed's NAP articles with a few personal selections e.g. Marks and Spencer (LON:MKS) replacing a sin stock; Imperial Brands (LON:IMB) . 10% down on that one currently for my troubles - more profitable perhaps to be a sinner! Luckily short term losses offset by Alliance Pharma (LON:APH) yesterday - also I need to get out of s-t term mentality! Will have a look at Ed's comment re possible replacement. I'm used to using stop losses but veering away from these for NAPS. May just use for the speculative stocks with level matched to volatility - e.g. Serabi Gold (LON:SRB) - a sector in which I have no previous experience.

Barbara

12th Jan

Off topic of the thread but thought I should mention it. Friends lost their house and all their possessions to a fire last year. Recalling a list of all their possessions and proving they had them was almost impossible. As a result can I advise everyone to open all their cupboard doors and walk round the whole house videoing each and every room so you have evidence of your belongings should the worse happen.

TurnLeftatOrion

In my haste to reinvest my wife's ISA to follow the 2025 NAPS, I did not notice that Alliance Pharmaceuticals had received a takeover bid and bought them at Friday's price. So rather than getting a nice lift, I have taken a hit on spread and transaction costs. It might be prudent to put a note in the table above to say don't buy these now ED.

Spot on take photos of valuable stuff thankfully our insurer was really good only chipped us down on garden plants the value lost of plants to replace was near 5k but we were only covered for 1k.

Same as outside furniture only 1k which is the cost of a decent outside pine table and four chairs alone, but other than that they were brilliant just credited the bank account and we could choose our own trusted tradesmen for repairs.

It does say on the Stockreport "This security is involved in a takeover situation".

Always worth checking the charts, before buying any shares, it usually fairly obvious from that.

Even if not a take over, l would rarely buy any shares, that have a spike up.

13th Jan

This comment is under review

Peter Staveley

27th Jan

In the article you repeated that the criteria for NAPS 2025 are:

Sort by StockRank descending.
20 stock portfolio.
2 from each sector, but just one from Telecoms and Utilities.
Top up with the next highest-ranked stock from 2 of the other 8 sectors.
Minimum market cap of £20m, and max bid-ask spread of 7.5% (750 basis points).
No investment trusts or funds.

What I cannot find is what the 'tie break' criteria are. So if, in a sector there are, say, 4 stocks all with a StockRank of, say, 99, how do you decide which 2 stocks are picked for NAPS?

If you look at Browse then top Stocksranks then top Stockrank, they are in order, they maybe 99.4 or 99.2 or 98.9, but it only shows 99 on the screen. That is what l go by. It is shame the double sorting, was lost with the new system, that was so useful for this exercise. You could sort by sector and it was sorted by ranking order as well.

Edward Croft

Yes it might be ideal if on download we gave the decimal places... but the ordering is accurate I believe.

Nonns

27th Feb

Got my timing completely wrong on Yu. Down 20% :-/ overall doing quite nicely though.

My portfolio is a mix of naps and some other shares I’m interested in.

New Year Naps - Top Stocks for 2025 with a segue to the QVM Portfolio

Looking to the QVM Portfolio of the future

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Edward Croft

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