What a year it’s been for small caps!
The JSE All Share is up a decent +11%, but the real performer has to be the small cap index up an incredible 25.1% this year!
And what I’m most pleased with of course is our Red Hot Penny Share Portfolio which has outperformed both with a phenomenal 26.17%
If you stayed calm and kept invested through this election year and all the global upheaval you should have been rewarded with an excellent return on your portfolio so far.
I believe a united GNU and pro-growth economic policies should continue to drive SA stocks – especially small caps – higher in 2025.
So with that in mind, I want to share my top three small cap stocks to watch in 2025.
2025 JSE Small Cap to Watch #1: Jubilee Metals (JSE: JBL)
Jubilee is a diversified metal recovery company. The company owns plants in SA that produce chrome and platinum group metals from old mine dumps.
It also owns copper mine dumps, the Sable Refinery and Roan Concentrator in Zambia.
2024 has been a year of ups and downs for Jubilee.
Firstly, the miner has achieved numerous milestones, which include:
• The commissioning at Roan
• Production increases at Munkoyo Open-Pit copper mine
• Signed agreements to source uninterrupted renewable power for its projects
• Completion of Jubliee’s second chrome processing module – the Thutse Project
Despite these many achievements, Jubilee share price is down nearly 25% this year. This is to be expected with falling PGM and copper prices, but things could look a lot different for Jubilee in 2025…
For one, Russia could ban palladium exports as tit-for-tat sanctions with the US and EU intensify. And this move could drive palladium supply into a deficit. Platinum supply deficit is also worsening as demand recovers thanks to booming hybrid-vehicles sales. In short, I think we could see a recovery in the PGM markets next year, which will benefit Jubilee immensely.
Secondly, Jubilee is rapidly expanding copper production. And as you know, copper is one of – if not the most – important metals in the world.
Remember though, Jubilee is not an investment for the risk averse. Mining is risky. Junior mining is even riskier. Additionally, commodity prices can be very volatile.
I’ll be watching this one closely, ready to pull the buy trigger.
2025 JSE Small Cap to Watch #2: Purple Group (JSE: PPE)
Purple Group is known for pioneering easy low-cost investing in SA – with its EasyEquities platform. And it’s been a boon for the company.
Just consider, EasyEquities assets under management (AUM) have grown from R155 million in 2015 to R34.9 billion in less than 10 years. What’s more, in the last five years, its customers have grown over a 1000%!
Looking forward for Purple, there are number of drivers that can boost revenues/profits and ultimately, its share price.
For one, in early 2023, EasyEquities announced a partnership with GCash. With over 70 million active clients, GCash is the largest and fastest growing finance app in the Philippines.
The partnership aims to make investing accessible to all qualified Filipinos. It will allow Filipinos to access the US stock market with ease.
If EasyEquities captures just 1% of the market, it could add 700,000 new clients.
Secondly, EasyEquities continues to score partnerships with major JSE companies – which will attract new clients.
Thirdly, the GNU has spurred interest in SA assets again – which has driven many retail investors into the markets. This gives EasyEquities AUM a boost and ultimately will drive revenue higher.
In fact, the above catalysts are already proving their worth with Purple Group recently announcing it expects an increase in headline earnings per share (HEPS) for its 2024 financial year to soar between 182% and 191%. I expect similar growth in 2025, which makes Purple Group a small cap to watch!
2025 JSE Small Cap to Watch #3: A special kind of food producer!
In my free MoneyMorning eletter I recently warned high inflation is not over. And there were a few reasons why I think it could surge again in 2025.
In short…
• Trump’s tariffs will make imported goods more expensive – ultimately driving up prices.
• Deporting working illegal immigrant in the US could drive labour costs higher.
• Further war escalations across Eastern Europe, the Middle East and potentially in Tawain, will continue to disrupt trade and oil production – sending prices higher.
One way to hedge against rising inflation – and profit – is to own companies that can pass on rising costs to customers – without impacting demand.
Which brings me to my third and favourite JSE Small Cap on my watchlist.
A fantastic south African food producer! Some of its well known brands command more than 50% market share and I believe it’s these high demand brands that will drive revenue and profits higher in 2025.
To get the details of this fantastic small cap, just sign up to MoneyMorning, it’s absolutely free.
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