3 mega-cheap small-cap stocks to consider in December!

These small-cap stocks are on sale right now. Royston Wild thinks they merit serious attention, even from investors chasing passive income.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Looking for the best small-cap stocks to buy before the end of 2024? Here are three top shares I think are worth a close look, and especially at today’s prices.

Renold

Created with Highcharts 11.4.3Renold Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Renold (LSE:RNO) manufactures chains, gears and couplings for a variety of industries. They carry ore out of mines, make conveyor belts move, and drive the wheels on subway trains, among other things.

Today, the firm’s shares look cheap, trading on a forward price-to-earnings (P/E) ratio of 7.7 times. This in part reflects uncertainty in key sectors such as manufacturing, construction and mining.

Should you invest £1,000 in Rio Tinto right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Rio Tinto made the list?

See the 6 stocks

Yet Renold’s ongoing resilience suggests this low valuation may be unjustified. Revenues at constant currencies rose 0.6% in the six months to September, while order intake rose 11.5% year on year.

This is impressive, as is the firm’s ongoing work to boost margins. Efficiency measures helped push adjusted operating profit 4% higher in the first half.

Renold does have £42.2m of net debt that investors should bear in mind. Still, the company’s recent decision to reinstate dividends is a good sign that this is manageable.

Character Group

Created with Highcharts 11.4.3Character Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Character Group‘s (LSE:CCT) a rare commodity in the realm of small-cap stocks. This is because most smaller growth shares reinvest any spare cash they have as they chase future profits.

However, Character has a decent history of returning money to its shareholders with dividends. It’s a record City analysts expect to continue, so the forward dividend yield here’s an impressive 6.8%.

The business manufactures a wide range of toys and games. So unfortunately this leaves it at the mercy of interest rate movements in the coming year and their impact on consumer spending. Latest financials showed sales fall fractionally in the six months to February, to £54.6m, as consumer spending remained under pressure.

But with inflation moderating and the Bank of England signalling more rate cuts, revenues could rebound. And this could reinvigorate its share price following recent pressure.

A modest forward P/E ratio of 9.8 times leaves scope for a price rebound too.

Ramsdens Holdings

Created with Highcharts 11.4.3Ramsdens Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Pawnbroker Ramsdens Holdings (LSE:RFX) is another low-cost, dividend-paying small-cap share I believe’s worth considering today.

It trades on a forward P/E ratio of 9.3 times. Meanwhile, its corresponding dividend yield’s 4.8%.

To put that — along with Character Group’s yield — into context, the average dividend yield for FTSE 100 shares is way back at 3.6%.

Pawnbroking companies are thriving in this tough economic climate. Ramsdens, for instance, is expected to have generated record profits in the last financial year (to September). With the cost-of-living crisis persisting, City brokers expect new all-time highs to be reached this year too, as people rush to raise cash.

Ramsdens’ bottom line should also benefit from ongoing estate expansion. Today, it operates 169 stores, up from 161 a year ago.

Earnings will suffer if gold prices continue their recent descent. But on balance, I think this small-cap star looks in great shape.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »