Paul's Top 20 Value/GARP Share Ideas for 2024

10th Jan by Paul Scott

15 comments 5214 reads

Paul’s favourite share ideas for 2024

(This article expands on the detail of my spreadsheet published on 2 Jan 2024's SCVR - the share ideas are the same)

Starting in 2023, I decided to start publishing a list of my favourite value/GARP shares (growth at reasonable price). This ties in very closely with the Small Cap Value Reports (SCVRs) which I’ve been writing for 12 years now - daily reviews of the small caps news (mostly results and trading updates).

So my annual reviews are really a “best of the SCVRs” all just in my personal opinion (but backed up by facts & figures). It’s important to remember that there’s a lot of judgement in choosing shares, and also a fair bit of guesswork and luck - because nobody can predict the future, so we really have no idea which shares will go up or down, as the facts constantly change as time goes on.

What drives share prices?

There are different layers to share prices. They’re influenced by the company, and sector fundamentals. Then there’s a whole range of market, and sentiment factors to take into account. As we’ve seen in the last two year bear market for UK small caps, even companies that are performing well can see their share prices drop. Why? Because share prices are just a function of supply and demand. So if a fund manager is having to raise cash to pay out clients who want to withdraw from an open-ended fund, then they have to sell anything they can - which can sometimes be their best shares (as they have buyers in the market).

Or, people sometimes sell through boredom, and/or frustration at a constantly falling share price despite good fundamentals (guilty as charged: I stupidly sold HVO in early/mid 2023, despite liking the fundamentals a lot, missing out on a big gainer more recently).

I think it’s a mistake to imagine that the market is always logical and accurate in valuing shares - it frequently isn’t, and this is what presents small caps specialists with our buying & selling opportunities, when the market gets over-excited (e.g. 2021), or excessively gloomy (much of 2023). It’s always easier to see this clearly with hindsight though!

With my top 20 list of favourite shares ideas, I’m not able to predict which shares are likely to…

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Fegger

10th Jan

I find Tortilla intriguing as I also have been really impressed by the product. Need to do more assessment before deciding whether to invest. Anyone wishing to try them out can potentially do so more cheaply through the Too Good to Go app (if available in your area). Choice of meal from end of day food at price of £4 for me in South London.

jonno

Morning Paul

What a gargantuan effort. Very well done.

I hold a number of the shares mentioned; Volex (LON:VLX) ME International (LON:MEGP) Bloomsbury Publishing (LON:BMY) Porvair (LON:PRV) and will explore the others in your selection for possible investment.

Volex (LON:VLX) and Bloomsbury Publishing (LON:BMY) are in my top three and I would not be surprised to see a further ahead statement from the latter before the finals in May. Reasons:

The popularity of Sarah J Mass, which was cited in the previous update.
Katherine Rundell's children's fantasy novel 'Impossible Creatures' is Waterstones Book of he Year. Two more novels in the same series to follow.
The Three Body Problem a science fiction novel by Liu Cixin has been made into a television series by Netflix, to be aired soon.

Further down the line the Harry Potter books are being made into a television series by Warner Bros Discovery.

Just my thoughts and I am often wrong.

All the best

gmtrader

Thank you Paul for this write up. Will spend some time going through them all for possible future buys. Keep up all the good work. It’s appreciated.

Paul Scott

Thanks Fegger,

Coincidentally Tortilla Mexican Grill (LON:MEX) (I hold) was tipped in the Tempus column in today's The Times (behind paywall). It just says the shares are cheap, and likely to be bid for by private equity. A sector expert I consult regularly agrees.

It's horribly illiquid though, so I'm a bit worried that if something goes wrong, I'll be left high & dry, as I've been slowly accumulating more with each fall in share price, which as we know can be dangerous.

Fingers crossed!

Regards, Paul.

Epitychia

Thank you. As an author i understand the colossal amount of work put into this.

John LA

Hi Thank you so much for sharing, l very much like your analysis style and looking forward to 2024 being a better year. for my portifolio.

Like you I think POS has great possibilities, well heads are most critical piece of kit in any oil & gas project. They specialise in top end, e.g high pressure fields, also as I understand it their wellheads meet US regulations for methane leakage. As world politicians wakes up to the folly of climate change propoganda and lies , CO2 is not our enemy, oil & gas exploration will expand in order to avoid increasing world poverty which is worsening worldwide.

dodge1664

Paul,

So you agree with me that SVCR performance tracking IS necessary and that you had bad year in 2022 . So why all the foul-mouthed abuse when I made exactly this point just a few months back?

This comment has been moderated

Ian Taylor2

Hi Paul, interesting article, thanks and keep up the good work, I've recently joined Stockopaedia and it was your podcasts that clinched the deal! I also like the look of Plexus, my main concern is their ability to scale up. I would guess that having won a sizeable contract will tie up their engineering resource and I wonder how much resource they have..

TC99

Thanks Paul for this very useful article. Thanks also to Graham for his selection and explanation

turbo

Thanks for summarising your “best of the SCVRs” - a great resource for ideas and further research. Love your excellent maxim for 2024

"I think keeping flexible is really important, and when the facts change, we should change our mind, so pragmatism is my watchword going forwards."

Here's a list summary of your top ideas for 2024 (right click and 'open in new tab' for clarity):

Breakout Trader

Hi Paul, many thanks for sharing this, I'll be keeping an eye on these throughout the year - I own Volex (LON:VLX) and ME International (LON:MEGP) already.

Out of interest, was Card Factory (LON:CARD) close to making the cut?

I'm a big fan of Tortilla Mexican Grill (LON:MEX), their food is filling, quick, tasty - a great food option and Chipotle have been hugely successful with a similar offering... I agree liquidity Is a problem though.

11th Jan

Hi Ian!

Welcome to Stockopedia!

I've recently joined Stockopaedia and it was your podcasts that clinched the deal!

Make sure you tell the boss here! ;-)

That's a really good question about Plexus Holdings (LON:POS) (I hold) and ability to scale up. I do know they outsource production of the actual equipment, as POS is basically an IP company. The staffing is on a minimum level to retain US accreditations, at about 35 staff currently. It was well over 100 people when they were in their heyday, profitable, and valued at c.£300m back in c.2014. So I would expect them to be hiring now actually, given that the cash position has been sorted out, and the current financial year FY 6/2024 is decently profitable.

It's a good question though, so I'll ask management when I next speak to them.

Best wishes, Paul.

catalogue

12th Jan

Hi Paul, I have built various screens, most based on Stocko ones plus some of your favourites, all of which help but your paragraph "What drives share prices" trumps all. Thank you for that reminder.

14th Jan

Hi Breakout Trader,

Yes it was close! I've got a list of about 40 companies that were close contenders for my top 20 - basically most of the things we viewed as GREEN in the 2023 SCVRs.

So I'm planning on doing another article on more share ideas for 2024, but waiting for prices to fall a bit first!

Paul's Top 20 Value/GARP Share Ideas for 2024

Paul’s favourite share ideas for 2024

What drives share prices?

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Paul Scott

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