UK small-cap shares: here are the 6 best stocks I’d buy for 2021

UK small-cap shares are normally overlooked by investors. I think these six stocks will deliver stellar share gains in 2021.

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.

There’s nothing tiny about UK small-cap shares. These companies can deliver some great returns and I expect next year to be no different.

So what am I buying? Here are six UK small-cap shares I think have great potential in 2021.

#1 – Covid-19 treatment

Instead of focusing on large pharma stocks, I’ve turned my eye to Synairgen. It’s a drug discovery and development company for respiratory diseases.

Synairgen’s Covid-19 treatment, SNG001 has been the star of the show. The drug is undergoing Phase II trials and so far the results have been positive.

The game-changer for me has been that the US regulator, the FDA, has awarded SNG001 a fast-track status, which means review times for the treatment will be shorter. The coronavirus pandemic has not been resolved yet and I expect 2021 to be a fantastic year for Synairgen.

#2 – Gold-miner

Greatland Gold shares have had a phenomenal year and I think this stock is well position for 2021. The miner has had a series of drilling successes, especially with its Havieron project due to its partnership with Newcrest

Although the miner is still loss-making, I think it has strong potential in 2021 to deliver some great returns. I also expect gold to be in demand next year as the coronavirus crisis continues.

#3 – Video games

Another UK small-cap share is Keywords Studios. 2020 has been a strong year for gaming stocks as most people have been stuck at home during the coronavirus pandemic. Instead of making and releasing the games, the company offers services, such as art and audio, to other game houses.

Keyword Studios has a strong reputation in its field and works with major game distributors. It has recently upgraded it guidance for FY2020 and expects strong demand for its services to continue aided by upcoming console launches. I see potential for the shares to keep on rising.

#4 – Logistics

The coronavirus pandemic e-commerce boom has helped Clipper Logistics. While the stock is trading at an all-time high, I think it has further to go in 2021. Clipper offers a range of services such as warehousing and delivery to large retailers including ASOS and John Lewis.

The stock has a lot of momentum right now and I expect this to continue into next year. E-commerce is here to stay and the pandemic has been a catalyst.

#5 – The tech portfolio

For those, like me, who want exposure to upcoming tech companies, Draper Esprit is a fantastic stock. It’s a venture capital company with a portfolio of some of Europe’s fastest growing private, pre-IPO businesses.

Tech is here to stay especially after Covid-19. The management team has successfully displayed its ability to identify, invest and exit companies. I think Draper Esprit is a good way to diversify tech exposure in a portfolio.

#6 – Currency risk

Another UK small-cap share I like is Alpha FX. It’s a founder-led financial services firm that helps companies manage currency risk. Some of its clients include Holland & Barrett and Halfords.

The firm has grown at a phenomenal rate and recent trading updates suggest there’s continued strong demand for its services. Given the uncertainty of 2021, I expect companies will want help with currency risk management. This places Alpha FX in a prime position and I believe the shares will continue to soar from here.

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.

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended Alpha FX, ASOS, Clipper Logistics, and Keywords Studios. 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

A pastel colored growing graph with rising rocket.
Investing Articles

£6,000 in savings? Here’s how I’d aim to turn that into £1,032 a month of passive income!

A small investment in high-dividend-paying stocks with the returns used to buy more shares can generate big passive income over…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
Investing Articles

As Lloyds’ share price tumbles 14%, is this an unmissable opportunity for me to buy at a bargain-basement price?

The Lloyds share price is substantially below its year high, but decent earnings prospects should drive its price and dividend…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

2 UK shares that could rise if Trump wins the Presidential election

These UK shares are among the FTSE 100's most popular stocks. And they could rise in value if Donald Trump…

Read more »

Closeup ruffled American flag representing US stocks and shares
Investing Articles

2 UK stocks that could rise if Harris wins the Presidential election

Royston Wild believes these UK stocks could receive a bump if Kalama Harris wins the Presidency, giving their share prices…

Read more »

Investing Articles

After a 96% plunge, is buying more Aston Martin shares throwing good money after bad?

Just two weeks after buying Aston Martin shares Harvey Jones found himself nursing a painful loss. Yet after recent news…

Read more »

Investing Articles

After crashing 45% in October, should I buy this FTSE 250 share for my Stocks and Shares ISA?

Roland Head explains why he’s tempted to add this risky FTSE 250 turnaround share to his Stocks and Shares ISA…

Read more »

Investing Articles

Could I use a stock market crash to turn £20k into half a mil in just over a decade?

A stock market crash might sound terrifying to some but it can also present a once-in-a-lifetime opportunity to accumulate generational…

Read more »

Investing Articles

Recently released: October’s small-cap stock recommendation [PREMIUM PICKS]

We believe the UK small-cap market offers a myriad of opportunities across a wide range of different businesses and industries.

Read more »