UK small caps: our festive stocking fillers

Managing portfolios isn’t always so different. You need to think about who gets the prime spot, who plays nicely together, and who’s likely to cause indigestion.

The good news?

UK small caps offer an appealing guest list. And right now, you can pick up their shares for the price of a nice bottle of Crémant, rather than paying Bollinger money. Happily, the UK Budget finally in the rear-view mirror. There was plenty to worry about in the run-up – and those leaks didn’t help – but, in the end, it wasn’t as bad as it could have been. Bond markets agreed, with yields barely budging. 

And with that weight lifted off UK markets’ shoulders, maybe it's time for sentiment towards UK equities to improve again, particularly those more domestically oriented firms. So, what might be in our Santa sacks this year?

Cranswick – the Christmas classic

No festive table is complete without Yorkshire-based food producer Cranswick. It supplies supermarkets with premium fresh products and has strong ties with the likes of Marks & Spencer. My favourite Christmas accompaniment – pigs in blankets – wouldn’t be the same without Cranswick.

Dunelm – the cosy crowd-pleaser

Buying for the in-laws is always tricky. That’s why you can’t go wrong with Dunelm, especially for its cosy bedding. Shoppers agree. The company has continued to perform across different consumer environments, thanks to management’s sharp execution. Construction names – building for the future. While the kids are busy with Lego (other blocks are available), investors can get a slice of the construction world with Balfour Beatty and Galliford Try.

Both have healthy order books, supported by spending on power, water and infrastructure.

Travel stocks – a ticket out of the blues

Every celebration comes with the post-party slump. So, as you’re taking down the tree, why not book that summer holiday? In our view, Jet2 Holidays and On the Beach appear well placed to keep delivering from strong demand as families plan ahead.

Applied Nutrition – new year, new you

January is the time for resolutions. Consumers are increasingly focused on good nutrition as part of a healthy lifestyle. Applied Nutrition’s products are in demand, putting pep in Britain’s step.

CVS – for the pet lovers

Santa still hasn’t brought me the puppy I always ask for. But if you’re lucky enough to have a pet, you’ll appreciate CVS – the leading veterinary services group in the UK and Australia. With the CMA regulatory review now behind it, the business looks set to invest for growth. Now could be the time to fetch some shares.

Final thoughts…

As Christmas approaches, remember: those guests you dread can sometimes be a source of joy. And for investors, UK small caps could be the gifts that keep on giving – at prices worth celebrating. A Happy Christmas, indeed.

Santa says: Companies selected for illustrative purposes only to demonstrate the investment management style described herein and not as an investment recommendation or indication of future performance.