Just released: our 3 top small-cap stocks to buy in 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:

Goodwin (LSE:GDWN)

Why we like it: “Established in 1883, Goodwin (LSE: GDWN) is one of our favourite ‘family companies’ in the UK — boasting a long, outstanding track record of creating wealth for the select few lucky shareholders who have uncovered it. Family-run businesses, in our experience, tend to be cut from a different cloth from your average listed company — there are few greater motivators for a management team than continuing and protecting a proud legacy, especially when much of your family’s wealth is tied up in the business.“The company still operates its historic steel foundry business in Stoke, but has expanded to include manufacturing subsidiaries around the world – 70% of Goodwin’s sales come from abroad, serving global oil & gas markets, the mining industry, and others. It obsesses over the quality of its offerings, positioning itself as a key supplier to blue chip companies in the manufacturing of specialised components such as check valves and slurry pumps. It might not be glamorous, and investors won’t thrill too many people talking about Goodwin’s products down the pub or at a dinner party. But Goodwin makes a fortune from its position within these ‘boring’ areas of expertise, and it goes to show the value of mastering something simple.”

Why we like it now: Goodwin announced outstanding preliminary results on 7 August. For the fiscal year ended 30 April, revenue increased by 27%. The board proposed an increased dividend of 133 pence, up from 115 pence per share. Strategic investments in the nuclear waste storage industry and key components for the naval propulsion and hull construction markets by the Mechanical Engineering Division have come to fruition. The Group has demonstrated strong cash generation capabilities, reducing the gearing ratio from 47.8% to 35.1% while still incurring £16.42 million in capital expenditures for future growth.

“Best Buys Now” Pick #2:

Redacted

Want All 3 “Best Buys Now” Picks? Enter Your Email Address!

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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 Goodwin plc. 

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