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
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.
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
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
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.
