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- Smaller companies can provide investors with the potential for high returns; however, they also carry greater volatility than their large cap counterparts
- The MSCI UK Small cap index, has given an annualised return of 10.69 per cent in the last 10 years, highlighting the segments returns potential.
Smaller companies can provide good investment opportunities for investors, as they have the potential for high returns. However, small cap stocks can also be more volatile compared to their large cap counterparts. Small cap stocks typically have a market cap of less than £2 billion; however, due to the high volatility of the stocks in this segment, their market cap may vary.
The MSCI UK Small Cap index, measures the performance of the UK equity market’s small cap segment. The index’s performance stood at 10.69 per cent of gross returns for a 10-year annualised basis.
Also, the index’s dividend yield as of 30 June stood at 1.62 per cent, while its 12 month trailing price to earnings ratio was at 165.70x
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Let us take a closer look at the top 5 small cap stocks, which are not only high performing but can be kept an eye on in August:
Argo Blockchain is a global leader in the mining of cryptocurrencies. The company’s FY 2020 revenues rose by 120 per cent to £19.0 million from £8.6 million in FY 2019.
Also, it reported a 5x increase in its earnings before interest tax, depreciation and amortisation to £7.9 million, compared to £1.4 million in FY2019. The strong performance was linked to a smart growth strategy and an increase in mining capacity by the company.
Argo Blockchain has a market cap of £512.42 million as of 30 July 2021. It has given 300.60 per cent returns on a year-to-date basis to its shareholders, which is the highest among UK small cap stocks.
ARB’s trailing 12 month price to earnings ratio stands at a multiple of 267.1 as of 29 July.
Renalytix is an AI driven in vitro diagnostic company focused on kidney diseases. The company reported its Q3 2021 operating expense at US $8.1 million, compared with $2.7 million in Q3 2020.
Also, it’s Q3 2021 services revenues were at $0.6 million from its work for Mount Sinai. The company’s testing revenue stood at US$ 0.1 million.
Renalytix has a market cap of £812.59 million as of 30 July 2021, and it has given 123.66 per cent returns on a year-to-date basis to its shareholders.
FTSE All-Share index listed firm Reach PLC is a UK based newspaper and digital publishing company. The company’s revenue stood at £302.3 million, up by 4 per cent for the 26-weeks ending on 27 June.
Its revenues primarily came from its digital arm, with digital revenues accounting for 42.7 per cent of group revenues.
Reach has a market cap of £1.203 billion as of 30 July 2021, and it has given 167.76 per cent returns on a year-to-date basis to its shareholders.
FTSE AIM 100 index listed company Tremor International is an advertising technology firm. It is scheduled to announce its Q2 2021 and H1 2021 results on 19 August.
It had previously reported record performance for Q1 2021, with Q1 net revenue rising by 96 per cent to US$ 63.0 million. Its programmatic revenue rose by 105 per cent to US$ 55.7 million, driven by growth in connected tv, self-serve platform and other factors.
Tremor International has a market cap of £1.193 billion as of 30 July 2021, and it has given 100.51 per cent returns on a year-to-date basis to its shareholders.
Tremor’s trailing 12-month price to earnings ratio stands at a multiple of 770.6 as of 29 July.
FTSE All-Share index constituent, EnQuest is a UK based oil and gas company. It is scheduled to report its H1 2021 results on 2 September.
In its latest trading update, the company said that it expects production guidance for FY 2021 to be in the range of 46,000 and 52,000 boepd due to strong production in Kraken and PM8/Seligi.
EnQuest has a market cap of £457.34 million as of 30 July 2021, and it has given 115.57 per cent returns on a year-to-date basis to its shareholders.
Also Read: Top 10 micro-cap stocks for 2021
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