10 most tipped small-caps for 2020
If you missed it, last month we ran our annual Predictions and Top Picks survey. This had an unprecedented response, with nearly 7,000 participants each sharing a stock idea as well as their thoughts on key macro events.
With a cluster of 20 stocks getting 40% of all votes, I have already published the 10 'most tipped' big caps for 2020. In this wire, we look at the 10 most-tipped small caps for 2020.
In stark contrast to the big caps which had an average market cap of $68.6 billion, this group has an average market cap of just $1.3 billion. And between them, they saw a dramatic average share price increase of 191% last year. Those of them that have earnings carry an average forward PE of 113, and just one of them has the slightest of dividend.
All the same, this ten-pack of spicy sausages received an impressive 13.6%, or 972, of the ~7000 tips submitted. And if you recall, the equivalent list of ten stocks for 2019 had, at last count, gained 43% for the year.
Two stark warnings though before we get into the list. Firstly, that 43% mostly came from a couple of names that more than doubled (Jumbo, Nanosonics), while some underperformed the market, and a few went deeply negative. You could expect the same kind of wide dispersion of results again. Secondly, last year was an unusually strong year for equities, set up in large part by the Dec Q 2018 correction. Logically, or at least statistically, it seems unlikely we get another massive year in 2020, and as ever, a down year is always a possibility.
That all said, here are the ten most-tipped small caps for 2020, as voted by ~7,000 Livewire readers, along with recent commentary on each from Livewire's contributing fund managers. Thanks to Bloomberg from providing the company data added in the table below.
on EML
"#1 Most tipped small-cap: EML Payments, 2.5% of tips
EML Payments (EML) had a massive 2019, more than tripling in price. Even after such a big year, it was by far the most tipped small-cap with 175 (2.5% of the total) investors tipping it to have a massive 2020 as well.
Quite a few fund managers have been backing it recently as well. Most recently, Josh Clarke of QVG Capital who nominated it for our #1 stocks picks for 2020, saying he thought it ‘will be a lucrative bet’. Dominic Rose at Montgomery Lucent Investment Management also backed the stock recently, doing a deep dive in The investment case for EML just got stronger. Back in September, the stock received a 'buy' from both Arden Jennings at Ausbil and Robert Miller at NAOS in Buy Hold Sell: 5 hot small caps on a high. "
EML Price at posting:
$4.83 Sentiment: Buy Disclosure: Held
(20min delay)