Stock Picks | Video - Paul Scott Highlights 17 Stock Ideas Alongside Providing His Outlook For Small/microcaps In 2024

5th Dec '23 by Paul Hill

14 comments 2310 reads

Timestamps

In this highly entertaining interview, top notch small/microcap investor Paul Scott takes me through:

00:00 His outlook for smallcaps, M&A, benefits of the Stockopedia community & key learnings from 2023.

16:50 PLEXUS HOLDINGS PLC & portfolio position sizing

31:35 MS International

33:50 SPECTRA SYSTEMS A/S

37:30 Equals Money

41:30 Record, Argentex Group PLC & Cornerstone FS

45:50 General health of UK consumer & The Eggfree Cake Box

51:50 XP Factory & Revolution Bars Group PLC

54:50 Supreme PLC

61:35 Gresham Tech

64:55 Building products industry, Epwin Group Plc & importance of ‘cashflow / interest’ cover for indebted firms

73:35 Kier Group & adjusting for pension schemes

79:20 Renold PLC

82:10 Zotefoams & top slicing winners

88:30 Fonix Mobile & general areas to avoid in 2024

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Paul Hill

5th Dec '23

Valuation benchmarks for the above stocks

iwright7

6th Dec '23

A truly excellent interview from the 2 Pauls.

Of the companies reviewed I found Paul S comments regarding successive exceed expectations for Cornerstone FS (LON:CSFS) the FX tiddler particularly “interesting”. I thought it worth doing some additional desk research to try to work out why Cornerstone is outperforming. My conclusions are below…

Cornerstone is operationally geared with 60% GP which means a lot of any new revenue will drop to the bottom line. .
Expanded into new geographies, with more sales people and less (low margin) white label business.
Paul H mentioned the Cornerstone CEO is ex Equals. I do wonder whether he may have poached some of the good sales people/customers from Equals?
Unusual in that despite owning a modern FX cloud platform some 70% of their Forex transactions are made by telephone. Is this personal touch now paying off.? More on this from a Daily Mail article here…

https://www.thisismoney.co.uk/money/investing/article-12332017/SMALL-CAP-IDEA-Cornerstone-FS-carves-forex-niche-serving-underserved.html

I hold a starter position.

Michael C

A very interesting comment from iwright7, thanks. I personally won't do business with firms who can't handle telephone enquiries efficiently. But I suspect AI is going to make big inroads here, the latest iteration from OpenAI reportedly left the engineers asking whether they had developed a tool or a creature.

Michael,

I am sure that AI will have its part in FX. But Cornerstone FS (LON:CSFS) target customers are largely high net worth individuals and SMEs who largely prefer human contact. I assume that the FX staff are able to transact and confirm to the client that the money has been transferred to the correct account?

Does anyone else know of a benefit of dealing by phone?

jmallin1972

I always thought Nicotine was a dangerous and highly addictive chemical that can lead to an increase in blood pressure, heart rate (flow of blood to the heart) and a narrowing of the arteries (as well as contributing to the hardening of the arterial walls. https://my.clevelandclinic.org...

Hi Paul. Great interview as usual. Which software do you use for the valuation benchmark shown above

Thanks - Excel spreadsheet

Agreed jmalin

Nicotine is definitely addictive and like coffee/tea, alcohol, energy drinks, sugar & high cholesterol foods can & does cause health problems if people consume them in excess.

Nonetheless if nicotine patches, gum & vapes help smokers quit cigarettes/tobacco - which is what the NHS is saying/encouraging (re 1m free vapes being handed out across UK currently).

Then these side effects are certainly far less severe than people dying of passive/active smoking . Or at least that is how it appears to me - unless of course the NHS/government has missed something major.

Environmentally though, disposable vaping devices certainly need to be phased out / banned. Plus underage vaping is unacceptable.

af20001

A valid point made in the video is how quickly stocks can rerate, & how easy it is to miss a decent rally on good news.

On Beach group (LON:OTB) is a good example of that in the last few days.

DavidMcCabe

7th Dec '23

Hi Paul and Paul,

Great discussion, thanks for the comments on XP Factory (LON:XPF) which I hold in a very small way, good point on labour costs going up substantially.

For anyone who missed the RNS, the COO bought £35k of shares on Tuesday, and even if he does not have any hard financial data, he will have a very good understanding of the way the business is performing.

I suspect this triggered the 10% rise in SP yesterday, on what was relatively very high volumes. This could be a flash in the pan, or the ignition of a surge in share price. For the latter to be sustainable we would need a very positive trading update, possible after Christmas.

Thanks again.

David

Also, I forgot to mention I could trade well within the quoted spread, which would normally be too high for me.

Argentex is also interesting, especially at current price levels given the strategic review, cash heavy balance sheet and new managment team

Yorkshire

8th Dec '23

I work in industry for a big player as a product director.

depends on how the operations are set up on whether you can get confirmation. Maybe to the collection account but unlikely the end destination.

Main benefit of phone dealing is what we call white gloved service. Trader can talk you through options instead of trying to work it out yourself.

Video - Paul Scott highlights 17 stock ideas alongside providing his outlook for small/microcaps in 2024

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Paul Hill

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