The Motley Fool

Bothered by Brexit? I think this secret small-cap stock could be worth holding in 2019

Image source: Getty Images.

The farce that is Brexit continues to drag on, causing businesses to worry over how they will cope if the UK crashes out of the EU on 29 March without a deal. Naturally, all the uncertainty isn’t exactly helping investor sentiment.

With this in mind, here are a couple of companies that I think could do better than most if the economy does experience problems going forward, one of which reported to the market earlier today.  

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Primed for growth?

Given its market capitalisation of just £76m, it’s to be expected that the majority of retail investors probably won’t have heard of Begbies Traynor (LSE: BEG). I think this could be set to change over the next year.

The market minnow has been around for almost 30 years and describes itself as “the UK’s leading corporate rescue and recovery practice“. In other words, it works with companies facing financial challenges — something that could increase substantially if Brexit proves the nightmare some are predicting.

For now, however, things are moving along fairly nicely. Revenue rose by £2m to £28m in the six months to the end of October with adjusted pre-tax profit also climbing by a little over 10% to £3.2m. This was, according to the company, “ahead of a strong comparative period” and the result of an increase in the number of new insolvency appointments and previous organic investments. 

In addition to a 14% increase to the interim dividend, the Manchester-based business also announced that net debt had fallen by a little under 9% to £6.3m by the end of the reporting period. 

Looking to the full-year, Begbies stated that it was well placed to meet current expectations, although results would be second-half-weighted. 

On almost 16 times earnings for 2018/19, the stock isn’t exactly cheap, especially at a time when markets continue to look susceptible to further falls. Nevertheless, for the potential growth on offer, I think this can be justified. I own a small amount of the stock and plan on retaining it so for some time to come. 

Discount demon

Another stock that I think might be worth holding if tougher times lie ahead is FTSE 250 retailer B&M European Value Retail SA (LSE: BME). That might seem odd when the rest of the industry is on its knees, but hear me out. 

If an economic downturn really is on the way, people won’t stop spending completely. Instead, they’ll likely head towards retailers that give them more for their cash. In such a situation, B&M will surely be able to benefit from the economies of scale that befit its near-£3bn market cap and offer exactly the sort of generic goods people want when funds are tight. That’s what happened with discounters in the aftermath of the financial crisis and we can be fairly confident that it will happen again. 

That’s not to say that B&M has been immune to the sell-off in the markets over the last couple of months. In early November, the stock hit 426p a pop. Today, the very same shares can be yours for 33% less. This leaves them trading on 14 times forecast earnings (and offering a secure yield of 2.9%). 

While clearly nowhere near as cheap as some retailers — particularly those in the clothing industry such as Superdry, Marks and Spencer and Quiz — again, I feel that this relatively high price can be justified.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Paul Summers owns shares in Begbies Traynor Group. 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.