13th Jan 2023 17:34
(Alliance News) - John Menzies and Wentworth Resources were the top performing selected smaller cap stocks in 2022, according to analysts at Peel Hunt.
Analysts at the investment bank said John Menzies and Wentworth were the top two of 10 positively returning stocks selected by Peel Hunt last year, while a further 25 delivered negative returns.
On average, Peel Hunt's 35 smaller cap picks last year delivered a total return of negative 23% over 2022, falling behind the 0% total return from the FTSE All-Share Index and the negative 17% return of the FTSE250 Index.
Peel Hunt said John Menzies was the best-performing stock in 2022, with 96% total return. The performance follows the firm's takeover by Kuwait's Agility Public subsidiary, GIL International Holdings.
In March, John Menzies accepted an offer of 680 pence per share or GBP571 million in total on a fully dilute basis. The price tag was 81% higher than the company's share price of 335p on February 8, the day before the approach by Agility was first announced.
Wentworth Resources finished second in Peel Hunt's 2022 selection with a total return of 47%, followed by Lookers at 20% and Capital Ltd at 19%.
Peel Hunt has subsequently trimmed its 2023 selections to 26 smaller cap companies across 13 sectors, with a median market capitalisation of GBP170 million.
"It has been a tough few years for smaller companies, with investors preferring more liquid names," said Peel Hunt analysts Charles Hall and Clyde Lewis.
"However, there always good opportunities in the smaller cap space, whether the attractions are growth, value or income related."
The most heavily represented sectors in the 2023 selection are in financials, industrials, technology and travel & leisure.
The 26 companies in these sectors range in market capitalisation, from just under each GBP290 million each for Idox and On the Beach, down to GBP34 million for musicMagpie and GBP25 million for Serabi Gold, Peel Hunt said. They have all been given a 'Buy' rating.
Liberum also released its own stock selection, largely limited to those listed in the FTSE350 and STOXX6000. It added seven new picks to the 'Most Preferred' list, while removing three.
The three removed stocks were Medica Group, Ilika and Clarkson, while Liberum gave its backing to Keller Group, Accrol and AB Dynamics in particular, forecasting total shareholder returns of 84.9%, 77.3% and 68.9%, respectively.
"We reiterate Keller as our top pick...as underlying trading is better than expected and if anything, the outlook is better. There is upside pressure building on [its financial] 2023 estimates from NEOM and we believe there could still be a significant amount of work to come," said Liberum analysts Joe Brent and Alex O'Hanlon.
By Greg Rosenvinge, Alliance News reporter
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WEN.LLOOK.LCapitalIdox GroupOn The BeachMusicmagpieSerabiMGP.LIlika PlcClarksonKellerACRL.LAB Dynamics