UK A-Z List Part 1: Bargains and Opportunities
Looking at UK Stocks A-Z, EV/Sales < 5x
In my regular day job, I often gather data through web searches or by using APIs, typically with Python or other tools. The most valuable datasets are often those that can’t be fully automated or require some manual effort. For example, when companies need state-by-state tax rates for earnings projections, they either hire an accountant to compile the data or assign an associate to research and interpret the information manually and in house. Having accurate tax data is crucial for businesses to forecast their after-tax earnings and understand their cash flow over the next 3 to 12 months. I think investing is a lot like this too — I always question the idea of how easy it is to find ideas by just screening low price to book or low price to earnings multiples.
To be fair sometimes there are bargains in plain sight waiting for a buyer while everyone else is trying to figure out what’s wrong with it. I bought back into one of these recently in CBB Bancorp (CBBI). You run any low price to book screener on US companies or on US banks and you will consistently see CBBI in them. You would have seen it in 2022, 2023, 2024 and even in 2025 In my view, it’s a clear bargain, though it could easily be dead money for years.
On the flip side, how would you have discovered The Property Franchise Group PLC (TPFG) or The Hilton Food Group plc (HFG)? You might only know these names if you’ve spent time in the UK small-cap/AIM universe, are a UK resident, read other value investing blogs/substacks or discuss investments with someone from the region. I want to uncover more ideas like these. While CBBI is a solid opportunity, many U.S. stocks that come up in screens are far less compelling and I found it to be getting progressively worse in trying to source ideas here.
One thing I want to do regularly on the Substack (and as an investor) is work through an A-Z list of stocks to uncover ideas and opportunities that are either actionable or worth adding to a watchlist. This isn’t a pure A-Z method like Buffett or other investors might follow — it’s more of a hybrid approach, aided by one or two screening criteria to filter out uninvestable ideas. I wasn’t sure how effective this approach would be, considering what I mentioned earlier, but if it turns up a solid number of ideas, it could be a valuable time-saver. By using this method, I can skip past hundreds of unprofitable companies, early-stage growth stocks, and other dead ends.
I’ve been fascinated by investing in UK stocks for a long time, as I’ve discovered many compelling ideas that I wouldn’t typically find in the US. While the number of classic Graham-style deep value opportunities has dwindled, there are still plenty of average to above-average businesses trading at below-average prices — exactly the kind of opportunities we aim to capture.
Generating the Initial A-Z Stock List
In generating the initial list, I did the following:
- All stocks in the UK market (LSE, AIM)
- EV/Sales < 5x
- Excluding the largest caps (optional)
I wanted to avoid implying too much bias and judgement on creating this initial list. We might lose an interesting idea or two doing this. Generally, the goal is to exclude anything excessively overvalued and steer clear of large caps, as my focus is on smaller companies with significant upside potential — whether through value discovery or business growth. I also want to avoid automatically excluding certain industries or business types — like retail, insurance, or commodity producers. While it’s likely we’ll find fewer investable ideas in these areas, I want to stay open-minded to the possibility of overlooked opportunities that other investors may have left behind.
With that in mind, applying the above criteria and judgments narrows the list to around 900 stocks to review.
The Review Process
The review process has to be fairly quick; they are quick judgments on the businesses on some key figures/criteria/metrics. What we basically want to know on each security is if we are passing on them, we are expecting to pass on over 95% of the securities from this list. I want to spend maybe 3 minutes or less on each security, it’s okay to spend more time on it if it seems attractive. We are using an eye test and maybe some quick math here and there to do this, here are some of the basic criteria below:
Value Metrics:
P/E < 15x
P/TBV < 1x (If it makes sense to the quality of the business/what the business description is)
P/NCAV < 1x (If it’s a net net)
Source: TIKR
As a general metric to quickly pass on questionable ideas Altman Z-Scores < 2 as a statistical measure to keep us out of troubled assets. Net Debt/EBITDA > 3x would also likely pass on to avoid leveraged situations if possible.
Efficiency Ratios/Margins:
We can use these measures to kind of guestimate the quality of the business, and we can match it up with the long-term stock returns. Low or negative returns on equity signal to me a deep value idea where we want to investigate the balance sheet. Higher returns on equity could mean that we can ease up on the P/E and P/TBV multiples and it may just be a watchlist candidate for future research.
Source: TIKR
Profitability:
In general, we want to see 10 or more years of reported net income, free cash flow and perhaps cash from operations. This prevents us from being fooled by reported net income by focusing in on the opportunities that are truly cash generative. But it could also give us some insight on the timing of how the enterprise generates free cash flow. A lot of reported net income with a lot of negative free cash flow is generally a pass on the idea.
Source: TIKR
We can also investigate on the retained earnings to understand the history of past profits or losses. Most years of growing retained earnings is also an exciting trend to see.
Source: TIKR
Lastly, a history of paying dividends or stock buybacks, might be important with some of these deep value/obscure stocks. I’ve found a number of stocks listed on the LSE/AIM that was headquartered in another country that looked cheap, profitable and never paid a dividend. Have no idea how legitimate that would be.
Balance Sheet:
If I’ve gotten this far without passing on the idea and the stock looks cheap on a book value basis, I want to ensure there isn’t an excessive amount of goodwill or intangibles on the balance sheet — otherwise, it’s not as cheap as it first appears. I also check whether the company has a history of eroding tangible book value or equity. Depending on the situation, it might be acceptable if the business is burning 2-3% of tangible book value annually, but that can act as a drag on returns and set a ticking clock for the investment thesis to play out. Since that dynamic isn’t really my preference, I try to pass on those ideas when possible. If there’s a lot of PP&E in the book value that’s fine but usually less attractive than current assets as we would have to give an appraisal value or an estimate on those assets.
For net nets, current assets being full of inventory is less attractive than cash & receivables on a liquidation basis, although I don’t think that is a means to pass on an idea unless the underlying business is really poor.
The Final UK A-Z List:
In the end I did have marked down around 100 stocks that I found interesting throughout this exercise. I went back and tried to reduce this down to 20 ideas, but this was very difficult to do, so in the end I have around 25 ideas to work with in the UK. Now it is very possible I will pass on a lot of these after I spend more than 15-20 minutes on going through their investor relations materials. My hope in the end is there is around 1-5 actionable ideas at the end of this procedure. This is the list below (descriptions from Google or ChatGPT):
Anexo Group plc (ANX): A company specializing in integrated credit hire and legal services, primarily assisting individuals involved in non-fault motor accidents.
Anglo-Eastern Plantations plc (AEP): A company specializing in the ownership, operation, and development of agricultural plantations in Indonesia and Malaysia. The company primarily produces crude palm oil, palm kernels, fresh fruit bunches, biomass, and biogas products, as well as rubber slabs.
Camellia plc (CAM): A holding company primarily in the agricultural business producing nuts, avocados and some specialty crops. They have some investments in engineering enterprises and other alternative assets.
Card Factory plc (CARD): An online & brick and mortar retailer of greeting cards, gifts and celebration essentials with some similarities to hallmark.
Churchill China plc (CHH): Manufacturer and distributor of ceramic products such as plates, bowls, teapots, mugs, etc.
Creightons plc (CRL): Developer, manufacturer and marketer of toiletries and fragrances. Mix of bathroom, beauty and other bath and body items under various brands.
Enwell Energy plc (ENW): Company engaged in the oil and gas E&P activities with exposure to Ukraine.
FDM Group (Holdings) plc (FDM): Talent agency engaged in recruitment and training of IT and business consultants for potential clients.
Ferrexpo plc (FXPO): Swiss-based commodity trading and mining company, recognized as the world's third-largest exporter of iron ore pellets with primary operations in Ukraine.
Fletcher King plc (FLK): A company engaged in real estate services, including property fund management, asset management, investment broking, valuations, development consulting, and ratings advisory.
Halfords Group plc (HFD): Provider of motoring and cycling products and services. Established in 1892, the company has evolved to operate through two main segments: Retail and Car Servicing.
Ingenta plc (ING): Prominent provider of content management, advertising, and commercial enterprise solutions tailored for the publishing industry.
Jersey Electricity plc (JEL): Primary provider of electricity in Jersey, has operations in retail, building services and property management.
Jet2 plc (JET2): British leisure travel group specializing in low-cost airline services and package holidays.
Luceco plc (LUCE): Manufacturer and distributor of electrical products, wiring accessories, LED lighting and portable power solutions.
Macfarlane Group PLC (MACF): Provider and designer of packaging materials, boxes, bubble wrap, etc serving large number of retail e-commerce customers.
Next 15 Group plc (NFG): Company specializes in delivering strategic insights, customer engagement, digital marketing, and business transformation services to clients across various industries.
Nexteq plc (NXQ): The company specializes in providing outsourced design, development, and supply chain solutions for industrial equipment manufacturers across various sectors.
Samuel Heath & Sons plc (HSM): Manufacturer and marketer of high-quality products in the builders' hardware and bathroom sectors.
Sanderson Design Group plc (SDG): Luxury interior furnishings company specializing in the design, manufacture, and marketing of wallpapers, fabrics, and a range of ancillary interior products.
The Character Group PLC (CCT): Independent toy company specializing in the design, development, and international distribution of toys, games, and giftware
Ultimate Products plc (ULTP): Supplier of branded household products. The company specializes in designing, sourcing, and distributing a diverse range of homeware items, including small domestic appliances, housewares, laundry products, audio equipment, and heating and cooling solutions.
Vesuvius plc (VSVS): Global provider of molten metal flow engineering and technology solutions. The company specializes in designing, manufacturing, and supplying consumable products and equipment for the steel and foundry industries worldwide.
Wynnstay Group plc (WYN): is a leading supplier of agricultural products and services in the United Kingdom. Manfactures and supplies various agricultural inputs and specialized products related to farm & outdoor.
Group idea - UK Homebuilders/Housebuilders: This entire category seems pretty cheap, there were 5 or 6 ideas in this category that all seemed cheap on assets and some being net nets (mostly loaded with housing related inventory). I’m familiar with the US Homebuilder stocks and I think there’s some interesting opportunities to compare these ideas.
It looks like I’ve got plenty of ideas to keep me occupied for the next few months. I’m thinking of doing something like this once or twice a year if it generates a solid number of ideas. I’d also like to go through A-Z for Japan and Poland, though Japan’s list might be quite large, so I’ll probably need to split it into a few posts over time. Hopefully, the effort will pay off in the end.
Disclosure: I am not short on any of the tickers listed here. I own a small tracking position in ULTP. I am long on CBBI, HFG and TPFG. I may open a position on some of the listed tickers in the coming weeks/months.