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.

Everything has been going nicely in the market and all we need are gentle pull backs from these lovely rallies to give investors the confidence to keep buying. The FTSE250 has bounced 18% in a month:

Pretty much a great visual reference as to why you buy into fear and sell into greed. Now compare with the fear/greed indicator.

Fear sat at ‘3’ on that big low a month ago, everyone in the market was scared, the 250 was at its lowest. After an 18% rally on the 250, we are back to greed at 57. Once we get into Extreme Greed it will be time to take profits in stuff that look up with events.

The VIX which looked like it might be making a bowl has gone through the lows and ended that worry for now.

The Drewry Shipping Index has fallen again and it’s 60% off the highs – great news for importers and exporters:

Meanwhile the £ has risen from $1.22 to $1.34, a 10% improvement which is good news for retailers and importers when they hedge going forward.

The All World Index which I like to watch has now risen above all three major moving averages and those averages have started turning up sharply:

On Thursday the BofE reduced interest rates by 0.25% to 4.25% from 4.5%. Interest sensitive stocks rallied including Watkin Jones, (WJG) regularly featured here who have said that reduced interest rates would benefit the company by driving investors away from bonds and fixed interest and into property investment, paying them an increasingly better and more attractive return. They rallied 6% on Thursday to teste the years closing highs and a further 7% on Friday to make a new 9 month high.

Thursday afternoon we got details of a so called “trade deal” with the US and the UK. Starmer has bigged it up as some great deal that we had been trying to do with the US for a decade – it wasn’t. Basically we have got some of the tariffs we were going to be hit by, reduced and a modest deal. But the fact is most of these tariffs were not there 3 months ago and totting things up we will be paying more in tariffs since Starmer got in and the US will be paying less. the 27.5% car tariffs drop to 10%, still 10% more than where we were and it is limited to 100k cars. A good deal would be if we were both paying less. So he can get on Zoom to “Donald” as much as he likes and self -congratulate, but this isn’t a great comprehensive trade deal where both sides come out winning, we have caved in with limited damage net. Farmers will be hurt again by the beef deal – in the 80’s we were over 80% self sufficient in food, today we are hardly more than 50%. There will be something that happens in the future to wake us up, like another Covid and then we will panic. We still have 10% tariffs on cars. The tiny bit of steel we export gets out of jail. The FTSE250 could hardly raise a smile, up 0.6% on the rate cut and the trade deal – the 0.25% cut was already priced in so the deal moved us the 0.6%. There will be future rounds of trade deals but this sets the precedent for how poorly we will come off. Trump knows you get the best deal when the counter party is desperate. The UK government has panicked, done a quick deal, which rarely is the best deal. Let’s see what others achieve. We were the first to deal because the government were panicking on job losses.

I think it is time to buy small caps and have been going down the food chain to start building positions in a number of stocks under the £100m market cap. The Aim index has finally seen a break out and what looks like the start off a trend reversal. You can see from the Aim Chart here, a clear change in trend from the past year:

The big dip looks like a clear capitulation where many die hards threw in the towel. These capitulations are often great buy indicators. WJG, CAR, WRKS, CRL, are now all meaningful size holdings for me, all nearing multi-year highs off big lows, and I’m looking for others. Catching these lows early mean you get the full compounding effect of any recovery as small stocks move faster and bigger than their big counterparts in a bull market. I’d say small caps have been shunned for a year or two and some represent great value.

On to stocks

After a Bank Holiday Monday, the UK market carried on with where it left off, and we started to get the news rolling in.

Filtronic, (FTC), the RF device company posted a trading update on Tuesday:

No real details in there for the numbers but brokers raised forecasts for 2025 from 4.97 eps to 5.39p eps. Going forward the 2026 eps still forecast as 3p. So still that bit of ambiguity about earnings falling from this year. We will have to see. The market liked it though and the shares rallied 20p to 114p by Wednesday. Up with the fair value? I think 2026 need to be a lot better than 3p to attract long term buyers, that’s a PE nearing 40. If it gives a bit back and 2026 forecasts get raised further it might look decent value for me to buy back. But sill one of those stocks that could become a bit special down the line.

Victoria, (VCP) was briefly covered here back in November when they published news about their refinancing they were attempting to do. The shares rallied but have since fallen back after 6 months and no news refinancing. On Tuesday the published this:

That’s 6 months on, and no financing done. The co says 80% of the business is outside the US but that means 20% is and will likely get hit for tariffs? Not insignificant and something they could have done without. As I pointed out back then, this is very high risk, a rubbish balance sheet and a fairly binary situation. Take even more care punting it today imo. It could be a multi-bagger but there’s more chance it’s a zero waiting to happen in my opinion.

Creightons, (CRL) British-based beauty and well-being brand owner and cosmetics company, mentioned here for the bowl forming and the director buying saw yet more director buying on Tuesday.

I mention this as this is one month after the company year end, when you would think the co had a good idea where they were. Results should be around mid July.

Wednesday saw Cardfactory, (CARD) announce full year results:

You can read the rest where you read your RNS.

I thought the results were good on all metrics and the tone sounds confident too. But somehow the share price came off. I can only think of two possible reason, 1) net debt had risen and 2) “earnings will be weighted to H2”

Net debt rose as they spent $25m acquiring Garvan and paid a dividend too. But for that, net debt wouldn’t have changed much. So I can’t see why that should bother investors. Saying earnings will be weighted till H2 possibly made punters think they didn’t want to hold but the co has proved after saying this last year and delivering that their word is good and they are genuinely weighted like most retailers. I think sanity will return here before too long especially the nearer it gets to going XD for this size yield and circa 10% growth. For this year they are on a PE of 6 and a 6% yield.

The co is ‘in-shoring’ and bringing the production of certain products in house, which should help margins. They are not affected by the tariffs of any significance. CARD have lots of plans in place for mitigating the NI and minimum wage rises too and their expectations for FY26 remain unchanged and we expect to deliver mid-to-high single-digit percentage increases in Adjusted PBT in FY26, with margin in line with FY25. A final divi of 3.6p will be paid. Most of the Garven acquisition gains will come in this year.

There is a presentation on the website that is well worth watching. www.cardfactoryinvestors.com.

A frustrating share, but great management and I’m some point true value will out.

Interestingly a subscriber messaged me last week to ask if I had looked at Kitwave (KITW) I hadn’t realised how far the shares had come off having sold at around the 360p level.

I sold around the 340p level when former CEO Paul Young (80’s music was good wasn’t it 😊 ) sold quite a few along with other directors. If I had been wide awake I’d have been buying recently when directors were buying again and the shares were down at 250p. This week the co put out a trading update:

I thought that was rather positive and looking at forecasts, while in 2024 the company saw a 15% fall in eps, this year the eps is forecast to rise 30% . They score good quality ratings on Stockopedia:

Forecast to pay a 4% yield this year too, they now look good value again on a single digit PE in my opinion. I decided to start nibbling in across the curve as the shares have had a bounce and I’ll add a few regularly to average in for now ahead of the interims in July. When you look at the valuation Booker were bought out for by Tesco and the amount of M&A in this sector, there’s a good chance these rerate or get taken out by another player in my opinion. I’ll do a follow up at the results.

A few company results and trading updates I’ll be watching for this week. This week starts to see results and trading updates really pick up

13th OTB Interims

13^th RNWH interims

13^th KLR trading update approx.

14^th GRG trading update approx.

14^th VIC interims

14^th BRBY finals

15^th CURY year end trading update approx.

15^th PFD finals

15^th ITV trading update

16^th VTY trading update approx.

16^th FUTR interims

16^th ECEL trading update approx.

16^th FNTL Q1 trading update approx.

That’s this weeks coverage. I’m looking forward to getting longer into small caps and seeing that sector recover – falling interest rates are always good for small cap sentiment.

Have a great sunny weekend and recharge the batteries for a busy week ahead.

Rebel

Twitter @rebelHQ