Top 10 Small Cap Stocks to Keep an Eye on in 2021

Source: whiteMocca, Shutterstock

Summary

• Small cap stocks have delivered handsome returns in the last one year and can provide boost to your existing portfolio.
• These stocks are more volatile in contrast to bigger businesses and investment could be risky. 

As the markets are recovering steadily, small cap stocks are back in focus and seem to have outclassed the A-listers. Some of them have generated over 1,500 per cent returns in the past 52-week period, better than most of the global indices.

Stocks having market capitalisation between £300 million and £2 billion are referred as small-cap stocks. These businesses are often in a nascent stage with huge growth potential. However, investing in these stocks could be risky as these stocks are highly volatile and can be influenced by institutional investors. Therefore, one might seek help from professionals before taking a call on these stocks. The good part of investing in these stocks is that these stocks boost your portfolio growth and help you generate inflation adjusted returns in the long term.

Also read: Lens On 3 FTSE AIM Energy Stocks After the UK Focuses on Clean Growth Trade

In this article, we shall discuss top 10 small-cap stocks listed on the LSE.

                                             Copyright © 2021 Kalkine Media Pty Ltd.

1. Avacta Group Plc

UK-based biotechnology company Avacta Group Plc (LON:AVCT) made excellent operational progress in both the Diagnostics and Therapeutics divisions during 2020. Avacta Group has recently announced the AffiDX® SARS-CoV-2 rapid antigen test that detects the newly mutated variants of the Covid-19. Also, the Company had entered into a diagnostic license agreement with Biokit, which incorporates Affimer® reagents into a Biokit in-vitro diagnostic product. The company has strong growth drivers underpinned by Covid-19 spike protein binding Affimers.

In the last one year, the company delivered a substantial return of 1,200.00 per cent as of 25 March 2021 closing.  Market Capitalisation (£m): 625.84

Also read: 3 FTSE Retail Stocks in Focus After Kingfisher Shares Surge

2. Clipper Logistics Plc

The pandemic has been a boon for UK-based logistics company Clipper Logistics (LON: CLG). Throughout the pandemic induced lockdowns, the entire nation relied heavily on logistics and supply chain solutions.

Clipper Logistics witnessed an increase of 28 per cent in its logistics operations during the first half of 2021 and extraordinary level of trading during Christmas & Black Friday across UK and continental Europe. The online retailers are hugely dependent on the logistics services. Even in the post vaccine world, this trend is likely to continue. The logistics company recently won two major contracts with fashion retailers, River Island and Mountain Warehouse. The company expects to continue its good run in 2022.

In the last one year, the Company delivered a substantial return of 277.56 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 599.33

3. Synairgen Plc

UK-based drug maker Synairgen (LON:SNG) has underpinned its growth on the positive interim results of SNG001 (Covid-19 treatment) and is seeking regulatory approvals. Rising mutations of Covid-19 could make vaccines less effective. Amid the pandemic, the world is in dire need for a broad spectrum of treatment options and therefore, the company has commenced the dosing of inhaled interferon beta formulation (SNG001) in US-backed NIH ACTIV-2 trial. 

The company is in the development stage and hence rely on grants and cash balances to carry on all the business activities. The operations are financed by the sale of equity securities by private placements.

In the last one year, the Company delivered a substantial return of 245.21 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 325.86

4. Draper Esprit Plc

Draper Esprit (LON:GROW) is a leading venture capital firm that invests predominantly in digital technology businesses with high growth potential. The company had recently invested £32 million in Cazoo and Ravelin, two new companies during the first half of 2021. During the period, the company’s net assets grew by 8 per cent to £715 million.

In the last one year, the Company delivered a substantial return of 169.48 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 1,153.93

5. Naked Wines Plc

One of the leading direct to consumer (DtC) wine business, Naked Wines’ (LON:WINE) revenue soared by 80 per cent to £157.1 million during the first half of 2021. During the period, the wine company increased its warehouse and customer service capacity by 104 per cent and 80 per cent, respectively. The company is expected to carry the positive trading momentum into the second half of 2021.

In the last one year, the Company delivered a substantial return of 170.38 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 514.33

6. Volution Group Plc

UK-based provider of air quality indoor solution Volution Group Plc (LON:FAN) delivered resilient performance during the first half of 2021. The company witnessed strong revenue growth of 8.6 per cent on constant currency basis, driven by operational excellence and margin expansion. Also, the reported profit before tax of the company was up by 18.8 per cent to £14.2 million during the first half of 2021 (H1 2020: £11.9 million). The company witnessed strong profitability, and free cash generation that led to distribution of earnings; the company announced an interim dividend of 1.90 pence per share for H1 FY2021.

In the last one year, the Company delivered a substantial return of 150.54 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 744.18

7. Card Factory Plc

UK-based card retailer Card Factory Plc (LON:CARD) has generated strong sales through its online presence. The digital card business thrived during the pandemic led lockdowns and is expected to continue with the momentum. The company is good at cash generation and is taking steps to bolster its liquidity.

In the last one year, the Company delivered a substantial return of 97.29 per cent as of 25 March 2021 closing; has essentially doubled the investor’s money. Market Capitalisation (£m): 228.84

8. Keywords Studios Plc

Irish gaming services provider Keywords Studios Plc (LON:KWS) recently entered Australian market by acquiring 85 per cent interest in gaming firm, Tantalus Media Pty Ltd. Since May 2020, Keywords Studios has made seven high-quality acquisitions, further strengthening the breadth and depth of value-added services offered in the UK, the US and Italy.

The Irish company made a strong finish to the financial year 2020, driven by strong demand for services throughout the second half. The company would like to carry the momentum in 2021.

In the last one year, the Company delivered a substantial return of 79.85 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 1,806.11

9. Pan African Resources Plc

UK-based gold miner Pan African Resources Plc (LON:PAF) delivered a strong operational and financial performance during the first half of 2021, with net debt decreasing by 47.3 per cent and Record rand dividend payment in December 2020 of US$17.8 million. During the first half of 2021, the adjusted EBITDA was up by 72.9 per cent YoY, and earnings per share increased by 85.1 per cent YoY.

 In the last one year, the Company delivered a substantial return of 47.46 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 313.35

10. Alpha FX Group Plc

UK-based provider of FX risk management and alternative banking solutions to B2B clients Alpha FX Group Plc (LON:AFX) recorded 31 per cent spike in revenue, which stood at £46.2 million in 2020 (2019 £35.4 million). During 2020, the company witnessed an increase of 16 per cent in its clientele and the average revenue per client was up by 12 per cent. Also, the company declared a final dividend of 8 pence per share for 2021.

In the last one year, the Company delivered a substantial return of 38.02 per cent as of 25 March 2021 closing. Market Capitalisation (£m): 542.57