Weekend Rebel Review, May 24th, 2025

Small is beautiful - GRG, FORT, CURY, MKS, AVON, LIKE, WRKS, KLSO, STAF

This is just some thoughts, it isn't investment advice or incitement to buy in any way, just my views - please do your own thorough research. I’m not an analyst, I’m just a private investor looking after my own money. Nothing I do or say is meant as advice or should be taken as such. Here I publish my ideas and research that I have done and discuss the way I invest. Anything written here needs to be verified for its accuracy. Assume any stock I write about I likely own, so my views are biased. Inevitably I will get things wrong, everyone is responsible for their own decision making and what they buy and sell. Subscribing and reading this article means you accept the above and you take full responsibility for your own actions and decisions. Small Cap stocks can be illiquid and very hard to sell at times when demand is weak so caution is required.

Expect some spelling mistakes – I’m dyslexic and in a rush to get this out on a Friday so a bit of a task at times.

Well Brexiteers have started to be sold out on a single swipe from Starmer’s pen, no discussion in Parliament, no debate, no going through the detail, just a Trump-like executive order that most of us find incredibly stupid out there but many can cheer it on here. There’s one positive and that is the numerous Europeans Starmer is set to flood the UK with, with his youth mobility scheme, will be under thirties students, so a massive boost for Watkin Jones probably, who build student accommodation. The markets ended the day pretty flat and unimpressed, including the Aim market, not the usual big retraces from big highs.

Interestingly, the FTSE All-World index (AW01) is now back above where I sold out on back in February. It rarely goes that well but this trade in and out has been very worthwhile. I was expecting a pull back here on the old high but never expected a sharp one like today on Trumps noise, but it gets it out of the way a bit sharper. The market, having thought about his tariff comments decided to pretty much ignore him, “you keep crying wolf Donald”, in the end you lose cred when big boys won’t be bullied.

Two weeks ago, my substack subheading was “Small Caps Are Back“. In that time, Aim has risen 3% nearly while the FTSE250 has done around 1.5%. The FTSE Fledgling index has risen over 5%.

There are some great buys around in small caps and I will tell you why that is in my opinion. Aim has had a dire time. Fully listed small caps have done better but not great. When areas of the market fall relentlessly, investors capitulate. I capitulated with most of Aim a couple of years ago, it was just pointless trying to find hardly any shares that could rally because everyone was dumping into strength. But things are changing, market sentiment towards small caps is starting to improve, mainly because some have got so hideously cheap. Up until now, most punters haven’t wanted to know. Who wants to sit reading through RNS news and results when you know that even if you find a bargain it won’t go up? So punters stop even bothering to read the full results, they’d sooner go up the pub, go out for a walk or watch telly. And when they don’t bother fully reading the results and shares still fall, like they have on Aim, then they feel vindicated. But at a certain point small caps start to firm. They become so cheap that buying even after a 20%-30% rally on results is still cheap. And this becomes contagious. Because punters start to make money again, and start looking for more bargains. At first they are nervous, so they bank quick gains. But gradually punters gain confidence to hold for more. We are just going through that phase where punters realise small caps can bounce and hold that gain, and so the bull cycle in small caps begins.

There is a plethora of companies out there that have said things in RNS that investors should have been fully absorbed while reading the results, but have been ignored still, When these companies produce surprisingly strong results, they will get chased higher because investors were not paying attention. STAFF up 50% in a few days last week, yet you had all day, on the day of the news to get a decent position and still be up handsomely. I am the same, I have ignored a lot of small caps and I’ll likely miss out on some – but even while I sold out of the market nearly completely, before the tariff fiasco, I still kept a close watch on those stocks I have a good knowledge of and I am hoping that pays dividends going forward.

Here is the past two weeks comparing the FTSE250 (pink). FTSE Aim All Share (green) and FTSE Fledgling (mauve)

This is a big change in leaders, the FTSE250 is the laggard over 2 weeks. This was all before the FTSE250 dived on news that Trump had threatened Apple with 25% tariffs on iPhones if they are not made in the US and a blanket 50% tariff on the EU, the difference was even greater after that. A lot of small cap companies have been reporting better than expected results. Interestingly the FTSE Fledgling index, which harbours a lot of investment funds and the like has been really motoring over the past week and has broken through the pre-tariff high and last July’s high – investors buying into funds?

Inflation data came out this week and it is running at a higher level than expected. All the April pensions, benefits and consumer rises have been very firm and had their effect. We are going to need a lot more data before the BofE cut rates again I suspect.

On Friday, retail sales came in up 1.2% month on month, compared to 0.3% expected. Since, January that is 4 months of positive data. The good weather in April has obviously boosted sales and should carry on into May with the weather we have had. Retailers will claim the credit, it’s only when sales are poor that they use the weather as an excuse. All good news for the consumer sector though.

We got through a pretty benign week this week despite Trump. Here we signed up to being partially the EU’s servant and some scrappy deal that has seen all the happy clappy stuff from the government. What we haven’t heard from them is that we’ll have to pay higher carbon tax to match the EU, amongst other negatives and we have yet to hear what we are going to have to pay the EU in total. I’ll not go into the defence thing but give it a few weeks and we’ll see the true costs over and above living fishing rights away for 12 years.

Volumes have also picked up. I am regularly seeing +100% average daily volumes, often 200-300% ave daily volume on many small caps – volume was dreadful a few weeks ago, which was the lowest I had seen, probably a good indicator to buy.

On to shares

Monday was a typical Monday and not much from the Rebel Radar of stocks that I watch to report. James Cropper saw another bit of director buying but it’s just too illiquid to get involved with in meaningful size in my opinion, but nice to see more director buying happening in the small cap sector. Bids for companies seem to be plentiful.

Watkin Jones (WJG) had been tagged by Sharepad as having results last Weds (21^st) but that was an estimate, website now showing the date as the 29t^h, so this coming Thursday.

Greggs (GRG) put out their trading update on Tuesday:

You can read the whole statement where you read your RNS.

I thought that was very good with total sales up 7.4% and 140-150 stores to be added this year.

A class act by anyone’s standards, having just paid a final divi of 50p. 68.1p divi for this year forecast (3.4%). I watched the Greggs v McDonalds programme on Ch5 last week – they are going to take on McD in the evening food market now too.

I am holding from a few weeks ago cum divi after spotting the bowl that I posted on X a month or so ago so a 50p divi + £3 to the good on the shares, that’s a great bowl – the shares were up 10% on the day:

Fortera, (FORT), the UK’s second biggest brick manufacturer posted a trading update on Tuesday:

I highlight these as sales up 22% in the first 4 months looks stunning, that must be enough to nearly meet the whole years sales forecast already. The rest of the statement sounded very positive with debt down too. I hold Marshalls (MSLH) who have also been sounding positive and directors buying, and so has Michelmersh Brick (MBH). The sales growth and the bowl look very interesting imo – perhaps I have enough brick exposure but one to watch on good construction data as the market seems to be ignoring that sales growth.

Do your own research as ever, only you know your investment criteria and risk/reward profile – I may be wrong as always.

Currys PLC (CURY) posted their year end trading update on Wednesday morning.

You can read the rest where you read your RNS news. This was yet another upgrade to guidance and earnings forecasts are on an upward trajectory.

The stock looks cheap to me still (I sill hold quite a few but banked some as I was up 50% from March). The net cash position continues to improve as does earnings. They are forecast to reinstate a divi this year which should attract income funds here on out too. I have been banging on about the bowl on the chart for ages. Over 11p eps forecast for the coming year. 11.1p eps and a 2.4p divi for the coming year. Can I get better, faster small cap stocks now? Possibly. I will see how they go and whether I keep holding.

M&S (MKS) posted full year results on Wednesday

You can read the rest of the news where you read your RNS.

Overall it looks a respectable set of results with sales up 6%, food sales up 7.8% but the big headline is the £300m hit from the cyber incident, though this will be mitigated by insurance and other measures. They have been in long need for a new IT system and perhaps it’s better to bite the bullet now. The costs of this will be classed as exceptionals at the next results so investors can look through it but it is expected to take a couple of months to sort still. The only issue will be how many customers do they see go elsewhere short term and not return? I think M&S shoppers are pretty loyal and if anyone can retain customers it’s M&S. The shares dipped a bit then rallied back up 5% in the afternoon, investors willing to look through the cyberscam.

You can read the rest where you read your RNS. The shares have been covered in my substack for nearly 18 months now, it was a very confident statement. The company raised the interim divi and emphasised again that they will hit their margin and performance targets a year earlier than expected again, in 2026.

The shares rallied to nearly £17 to new recent highs and more than one bagged since highlighted here 18 months ago.

They had a presentation on investormeetcompany at 3,30pm on Wednesday, well worth watching the recording.

Likewise Plc had their results out last week but I ran out of time and space to cover them last week. The company supplies flooring and materials for floor laying.

The cash generation was positive and they have increased the divi and the overall results looked pretty decent. Sales growth has been continuing and rose to 10.2% in the final quarter, 7.4% for the year as a whole. If I remember right, this company was formed by a bunch of break-off directors from Headlam.

The company has the investormeetcompany presentation on their company homepage:

https://www.likewiseplc.com/

I watched this and was pretty impressed but there wasn’t any cash to buy at the results but I did buy this week following a 500k buy of the co shares by the Chairman. The company is also doing buybacks. It’s interesting that the consensus earning forecasts have been rising off of the results too imo.

Aim and fairly illiquid – don’t follow me blind, do your research, know your own risk/reward profile.

Well last week I published my “4 most exciting small caps” – all very ignored:

On Thursday, the first of them, The Works (WRKS), posted their year-end trading update:

You can read the rest (and I suggest you do) where you read your RNS news

Well that was music to my ears and pretty stunning update but I expected that because the board have been saying it was going o happen, both in RNS and on investormeetcompany. The Kelso guys had been in their guiding and taken a 6%+ stake. Several other investors have been buying huge stakes over the past 9 months too. It takes 6-9 months to generate tangible progress in a turnaround and Kelso seem to have been instrumental as a catalyst.

The valuation of this business after punters have capitulated just seems ridiculously low. With sales of £277m and a market cap of £18m. With £277m sales, the smallest rise in operating margins boosts operating profit dramatically. They are targeting £375m sales over the next 5 years.

It’s pretty basic – if you had £100m sales and your margins are 1% you make £1m profit. Increase your margins by just 1% more to 2%, and your profits DOUBLE to £2m.

I’m very pleased to have been buying heavy from 20p and I think these could be multi-baggers with the online fulfilment now being fulfilled by a new source and when the effects of the changes of strategy only started to take hold in H2. Ther footnotes suggest they are confident of growing profits further even with the £6m NI hit too.

As I posted at the top (written before the WRKS update), many punters are just ignoring small cap stocks because they have capitulated, but it’s changing.

Brokers Singer said on Thursday:

“After also rolling forward a year, our target price rises to
53p (+96%). The benefit of growth and rating expansion could yet deliver significant further upside,
for example to 87p in 1 year (using 3.5x) or to c200p in 4 years on full delivery of the plan (using 5x)

Take all broker notes, good or bad, with a pinch of salt imo. I’m happy following the other big investors here who have committed heavily and bought in not much lower than today’s price, especially Kelso.

However, it is illiquid and difficult to trade in volume so do your research and don’t follow me blindly, I’m probably stupid! Here’s the last iMC presentation from 4 months ago, if you want to do some research:

https://www.investormeetcompany.com/companies/theworkscouk-plc

There has been big buying going on – Chairman Stephen Bellamy, a turn-around specialist has bought 710k, most of those recently. Mike Burn (Chairman of Flagstaff Partners I believe, Australian Corporate Advisors if I have the right Mike Burn) and Graeme Coulthard (Retired Private Equity Partner / Private Investor) bought 5.7% and 7.4% in Jan and September respectively – both interesting business guys if you search them.

No share dilution at all from the chart highs 10 years ago when they were doing near 10p eps on just £217m sales. The company is targeting near double those sales:

The shares rose 30% before lunch on Thursday to 40p on well over 10 times normal daily volume. That sort of gain will make some traders’ heads explode I expect, if they haven’t made money in Aim for months, perhaps years, but with the momentum and city guys buying big stakes, and the huge undervaluation, they have got to go way higher for me to do any profit taking, even though I’ve nearly one bagged most of my holding from 6 weeks ago . Run your winners imo.

The best movers, the biggest surprises come from boring ignored shares that nobody is talking about. I see so many punters absolutely frothing at the mouth over shares everyone is talking about – how is there much left in the price if everyone knows the story, they are all telling their friends and they have all bought the shares? Who is left with money to spare that hasn’t already got the shares or enough of them?

When punters think a stock has had it, it’s boring, it’s old hat etc, then the only people holding are the die hards or those with too many to sell! Those are the share where the market gets the biggest surprise. There’s also the second wind – stocks like this often get a bit of a pull back because there are often ‘stale bulls’ who just want out and they sell into the initial strength. But they go too at some point and when the next leg up starts you often get those that thought they had missed the boat, buying them up. I try thinking how punters think, how I have thought with shares in the past imo. Look for the ignored rather than chase the sizzle. It won’t always work to plan but if you’ve researched a stock that nobody is interested in, you are ahead of the crowd. I did say last week it was one of my 4 most exciting shares, boring is exciting.

Sometimes it is almost as if I know what I’m doing 😊

Results will be much earlier this year, on July 22nd

New buys in the portfolio

I have been moving much heavier into small caps of late, as I said a few week ago, below are the main purchases.

Kelso (KLSO) these hold 6%+ of WRKS and the shares have been battered being a small cap investment co. They say this on their Website:

“Kelso will identify, engage and unlock trapped value in UK listed companies. Through active engagement and alignment with other stakeholders, taking stakes directly, Kelso aims to effect change where existing shareholders are often unable or unwilling to do so themselves.”

John Goold, CEO, via Freelands Investment trust has bought 3.5m shares this week, taking his stake to over 12%. Kelso is on the main market (Fledgling)

Kitwave (KITW), food wholsalers, mentioned here a couple of weeks ago. I’ll try to run through them when I get time. Search my substack archive.

Likewise (LIKE) Professional flooring distributors. Good results on 12^th May, Director buying since, share buy backs started, 0.375p divi. Forecast to do 1.2p eps this year, 1.5p for 2026. A bowl on the chart:

Staffline (STAF) a big contract win last week and a good trading update, while Insiders, Henry Spain, bought 1m shares recently to increase an existing large holding.

As I get time I’ll try to post some research on these and elaborate. Obviously they are small, illiquid and not the thigs to buy without doing full research first. If I am buying them, I obviously like them so I might be biased and not as objective as I should be so don’t follow me blindly – that’s a way to get burned.

That’s about it for this week. It was good to see yet more director buying at Creightons (CRL) It has been a great week, on top of WRKS, a lot of my small caps like WJG, CRL, CAR, W7L, STAF are up 15-20% this week. You could just feel this small cap market turning hot imo. It’s made for my biggest performing week in 30 months. At the end of the day though, it is just money, it’s not health and happiness – I try to keep it in perspective, the fun of hitting percentages and beating the market is what matters.

Have a great Bank Holiday and let’s look forward to some impressive gains from so many bombed out, ignored companies, and show a few of these big funds how to do it 😊

Remember there are no tips here, no advice, I am just laying out what I watch, what I see, my humble opinion and diarising hat I have been doing regarding investing. Do your research, act wisely and don’t blindly follow me or anyone. You press the buy and sell buttons based on your decision.

Rebel

Twitter: @rebelHQ