Some of the best stocks to buy now aren’t limited to the London Stock Exchange’s flagship indices. The world of small-cap companies is a breeding ground for innovative disruptors. And while the majority of small businesses fail to deliver on making waves, one firm from my portfolio continues to defy expectations.
Disrupting corporate banking
Alpha Group International (LSE:ALPH), formerly known as Alpha FX, is a currency risk management and alternative banking firm. The business model targets small- and medium-sized enterprises offering various financial solutions that are usually too expensive to acquire from traditional financial institutions.
The bulk of revenue stems from its risk management division, which helps companies with international exposure mitigate the impact of adverse currency fluctuations. However, following the launch of its alternative banking division a few years ago, the revenue stream has been propelled to double-digit growth territory.
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Today, the rapid growth of this newer segment generates close to 30% of the top line. And in the first six months of 2023, it has continued to expand by a further 32%, including deferred revenue.
What’s more, earlier this year, Alpha Group extended the capabilities of its alternative banking platform with yet another feature that introduces a fund finance intermediary offering. This enables customers to get directly connected with lending institutions that are most likely to extend a line of credit given their individual circumstances.
Pairing all this progress with continued demand for its core risk management service and a solid balance sheet, I believe Alpha Group is one of the best shares to buy now. And it’s why I’ve been slowly topping up my position in the last six months.
Taking a step back
Even the most promising enterprises still have risks, especially when it comes to small-cap stocks. Alpha Group may be well capitalised, but that doesn’t provide immunity to disruption. The corporate-facing fintech market is growing increasingly competitive. Other fintech firms like Argentex are trying to tap into the same market with similar offerings.
Meanwhile, traditional corporate banks are ramping up efforts to attract and retain customers. After all, these large institutions aren’t oblivious to the changing landscape. And some have already begun to adapt to counteract companies like Alpha from stealing market share. Their large size poses a significant threat given the vast quantity of resources they can access by comparison.
This obviously creates hurdles and challenges that could impede growth. It’s certainly translated into some significant share price volatility in the past. And it will most likely continue to do so in the future.
Yet, so far, this small-cap company remains on track and continues to penetrate a multi-billion-pound industry. Therefore, while there’s undoubtedly significant risk, the potential reward makes it worthwhile, in my opinion.
