Just released: our 3 top small-cap stocks to buy before August [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a portfolio of at least 15 small-cap stocks.

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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.

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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.

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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.

Premium content from Motley Fool Hidden Winners UK

Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

“Best Buys Now” Pick #1:

Polar Capital (LSE:POLR)

Why we like it: Polar Capital (LSE: POLR) is a London headquartered fund management company that boasted £19.2bn in assets under management (AuM) as of January 2024. While the investment management space often gets a bad rap – with the assumption that it charges high fees for poor performance – we have no problem recommending asset managers with long-term, Foolish investment styles, and believe that Polar’s technology and healthcare focus is appealing.“One of the attractions of fund management businesses is that they have massive operational leverage. Revenues typically grow at a rate that’s proportional to AuM, although costs stay much the same, so profits should grow at a faster rate. In the good times, when markets rise and revenues surge, then the company’s profits should grow even faster – which could potentially make owning the business a proxy for the market’s progress.”

Why we like it now: Polar Capital’s investment specialisms are helping it grow assets under management at a faster rate than peers. In its latest fiscal year, the company reported growth in assets under management of 14%, benefiting from strong gains in technology stocks. Potentially, AuM should continue rising as investors see its strategies delivering strong investment performance, which might attract more investors into its funds. While its technology focus has risks if the sector lurches downwards, the company boasts a strong balance sheet flush with net cash, which potentially makes it a less risky way for investor to gain technology exposure than investing in individual businesses.

“Best Buys Now” Pick #2:

Redacted

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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.

The Motley Fool UK has recommended Polar Capital Plc. 

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