I’m looking for the best UK small-cap stocks to buy for my investment portfolio. Here are a handful I’m considering buying before next month’s Stocks and Shares ISA deadline.
Agronomics
The popularity of animal-free diets is soaring as consumers worry about the ethics and environmental impact of livestock farming. This bodes well for Agronomics, a venture capital firm that invests in early-stage producers of lab-grown meat, seafood and other agricultural products.
As a consumer myself, I understand the risk of investing here. There remains a stigma around the industry and convincing people to eat artificial flesh might be a hard task. Meats that are grown in bioreactors might also remain much more expensive than their traditional counterparts.
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But forecasts from industry experts help to soothe my concerns on this front. Analysts at Future Market Insights for instance predict the market will grow at an annualised rate of 18.7% in the decade to 2032.
N Brown Group
Retailers such as N Brown Group are likely to face further stress this year as consumers tighten their pursestrings. Furthermore, profits are likely to be squeezed by higher-than-normal levels of cost inflation.
However, when taking a long-term view, I think this small-cap share is highly attractive. This is thanks to its focus on two fast-growing demographics, namely individuals over 50, and people who wear plus-size fashion.
Through heavy investment in its Jacamo, SimplyBe and JD Williams lines, the company is taking steps to become a market leader in these areas too. And N Brown has a strong balance sheet with which it can continue to enhance its brands and product offer.
Kodal Minerals
Soaring demand for electric vehicles (EVs) provides exceptional opportunities for UK share investors. Analysts at Goldman Sachs think sales of these low-carbon vehicles will soar to 73m by 2040, from just 2m in 2020.
Buying lithium stocks like Kodal Minerals could be a good idea for the coming years. This particular miner is developing the Bougouni lithium asset in Mali which contains an estimated 21.3 million tonnes of the silvery metal.
Kodal is well financed up until the start of production at Bougani. But remember that the business still carries risk for investors. Development setbacks at the mine could have a negative impact on earnings forecasts and, consequently, the small-cap’s share price.
Mpac Group
Ongoing supply chain issues remain a near-term threat to Mpac Group. But I believe the business, which builds high-speed packaging and production systems, has a bright future as companies invest more and more to automate their processes.
Encouragingly, customer demand for its technologies are currently showing signs of recovery. Order intake in the second half of last year was “significantly” ahead of those recorded in the prior six months, it said last month.
I also like Mpac’s focus on the defensive medical and food and beverage sectors. Profits here remain stable even during economic downturns, which in turn can provide the business with robust earnings visibility.
