2 UK small-cap shares I’m considering right now

Both these UK small-cap shares have received extra funds from the market and could become more efficient following the boost to their finances

| 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.

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.

I’m fond of investing in UK small-cap shares. Sometimes little companies can reward me faster than some slow-moving big-caps.

But the reverse is also true. If I’m wrong with my analysis, or if unexpected negative news arrives, small-cap stocks can plunge fast and far. And it’s possible to suffer big losses in hours rather than days. There’s often little time to sell if I realise I’ve made a mistake.

Big-cap shares can be more forgiving. Often share movements tend to be slower and run for weeks on a theme, rather than mere hours. But all stock investing carries risk. However, my aim is to reduce the risk as much as possible by careful research before buying.

Should you invest £1,000 in M&G 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 M&G made the list?

See the 6 stocks

Why I’m considering these UK small-cap shares

And right now, I’m considering the merits of two UK small-cap shares. The first is digital specialist-fit fashion clothing and homewares retailer N Brown (LSE: BWNG). The company’s market capitalisation is near £326m.

The business has been struggling for years and there’s a record of patchy earnings. But the company raised a gross £100m in a placing and open offer at the end of 2020. And the directors used the net proceeds to repay all unsecured debt.

Perhaps the financial reset will combine with a tighter focus on cash management to improve the prospects of the business. The company plans to use some of the funds from the capital raise to invest more in its digital capabilities and “accelerate its growth strategy.”

Meanwhile, with the share price near 69p, the forward-looking earnings multiple is just below eight for the trading year to Feb 2020. That valuation looks undemanding, but N Brown has been something of a serial disappointer. And there’s no certainty that the operational recovery and growth in the business will continue.

The second UK small-cap share I’m looking at Portmeirion (LSE: PMP) with its market capitalisation near £81m. The company manufactures ceramic tableware, cookware, giftware, glassware, barware, home fragrance products and associated homewares for markets worldwide.

An optimistic outlook

In the full-year report released in March, chief executive Mike Raybould was optimistic about the prospects for the business. In 2020, the firm raised around £10m from the stock market. And the directors used the money to expand the online and digital marketing teams.

Raybould reckons more efficient operations will help the business deliver “consistent, sustainable sales growth”. And there will also likely be better operating margins ahead. Meanwhile, City analysts have pencilled in a rebound in earnings for 2022 in excess of 50%.

Measured against those anticipated earnings, the forward-looking earnings multiple is around 10.  However, Portmeirion’s business has delivered patchy profits in the past. And the share price has been volatile. There’s no guarantee the improved operational set-up will deliver better returns for shareholders ahead.

Both these UK small-cap shares have recently received extra funds from the market and could shift into a more efficient gear ahead following the boost to their finances. But of course, as with all shares, there are risks. Yet I’m watching these two closely with a view to buying for the long term.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

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.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has recommended Portmeirion Group. 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

Passive income text with pin graph chart on business table
Investing Articles

How £100 a month could turn into £6,500 a year in passive income

With enough time, a 6.5% annual return can turn £100 per month into something that yields £6,500 per year in…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Is now a good time to start investing in the stock market?

Predicting what the stock market will do in the next few weeks and months is nearly impossible. But over the…

Read more »

Close-up as a woman counts out modern British banknotes.
Investing Articles

£5,000 invested in Legal & General shares 10 years ago would have generated passive income of…

Legal & General shares are one of the highest-yielding in the FTSE 100. How much passive income could have been…

Read more »

Passive income text with pin graph chart on business table
Dividend Shares

3 world-class dividend stocks to consider for passive income

These three stocks could potentially help investors create a stable – and growing – stream of passive income in the…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Diageo’s share price plunges 43% in 2 years! Time to consider buying the dip?

With sales falling, the Diageo share price is being hit hard. But with the shares now trading near 52-week lows,…

Read more »

Night Takeoff Of The American Space Shuttle
Investing Articles

The GGP share price skyrockets 100%+ in 2025 – Could this be the breakout stock of the year?

With the GGP share price more than doubling in four months, can Greatland Gold continue to thrive throughout the rest…

Read more »

Illustration of flames over a black background
Investing Articles

JD Sports’ share price soars 27% in just 3 weeks – is this the hottest stock to consider buying now?

The JD Sports share price is rising rapidly as management steers the business back on track. Can this upward momentum…

Read more »

Nottingham Giltbrook Exterior
Investing Articles

The Marks and Spencer share price stumbles on a cyberattack! Is it time to panic?

A disruptive cybersecurity breach has brought down Marks & Spencer’s online store, sending the share price tumbling. Should investors be…

Read more »