History has shown that it’s most often well-run businesses with a smaller market cap that turn out to have long runways of growth and eventually provide early adopters of the stock with incredible wealth creation. Here are four that Fool.co.uk’s contract writers are bullish on!
Anglo Asian Mining
What it does: Anglo Asian Mining is a gold and copper producer that’s listed on the Alternative Investment Market (AIM).
By Royston Wild. Thanks to its suite of gold projects, Anglo Asian Mining’s(LSE:AAZ) share price is rising rapidly as bullion’s multi-year bull run continues.
The small cap — which owns the Gadir and Gedabek gold, silver and copper mines in Azerbaijan — has risen 103% in value over the last year.
With macroeconomic and geopolitical uncertainty growing, and fears of resurgent inflation back on the boil, I think gold prices could have much further to go after hitting multiple new record highs in 2025.
However, Anglo Asian Mining’s foothold in the gold industry isn’t the only reason why I think it could be a hot growth stock to consider. I’m also encouraged by its plans to supercharge copper production to capitalise on the fast-growing green economy.
It plans to open several new red metal mines over the next few years, which it hopes will take annual copper production to 36,000 tonnes by 2028 from 15,000-15,500 today.
Any setbacks at the mine development stages could hit Anglo Asian Mining’s share price hard. But I think this is reflected in the company’s cheapness (it trades on a price-to-earnings (P/E) ratio of 6.1 times).
Royston Wild does not own shares in Anglo Asian Mining.
Animalcare Group
What it does: Animalcare Group develops and markets veterinary pharmaceuticals and identification products.
By Mark Hartley. The AIM-listed veterinary pharmaceutical and identification group Animalcare (LSE: ANCR) looks like an intriguing small-cap investment to me. Earnings have exploded recently, leading to a six-fold increase in its net margin. This was driven by strategic divestments, including the sale of Identicare and a minority stake in STEM.
However, debt has also skyrocketed to £23.16m, almost double that of its available cash. For now, it’s sufficiently covered by equity — but could be at risk if profits slip. Being a small-cap, it may also experience higher volatility and lower liquidity compared to larger firms.
With the price slow to catch up with earnings, it has a forward price-to-earnings (P/E) ratio of only 16, which is well below the sector average of 40. This suggests it has more room for growth. It also boasts an attractive return on equity (ROE) of 36.62% — a reassuring sign of efficient management and profitability.
Mark Hartley doesn’t own shares in Animalcare Group.
What it does: Central Asia Metals is a base metals producer with copper operations in Kazakhstan and a zinc and lead mine in North Macedonia.
By Paul Summers. Small-cap stocks usually require even more due diligence than your typical FTSE juggernaut, especially when their share prices have been on a downward trajectory. Central Asia Metals (LSE: CAML) is a great example.
Sure, ongoing geopolitical concerns combined with lower demand for one of the metals it digs up doesn’t exactly paint a pretty picture. And the miner obviously has no control over either.
But these feel like short-term headwinds. Demand for copper is expected to shoot up over the next decade as the world transitions to green energy at an increasing pace. This could eventually make the current valuation of seven times forecast FY25 earnings look like a steal.
In the meantime, the stock yields a monster 11.5% as I type. I’d prefer this to be covered to a greater extent by profit but at least the firm’s balance sheet looks solid for now.
Paul Summers has no position in Central Asia Metals
International Personal Finance
What it does: This financial services company provides home and digital credit to over 1.7m customers in nine global markets.
By Charlie Carman. Many individuals struggle to access loans from mainstream banks. That’s where a firm like International Personal Finance (LSE:IPF) steps in.
The growth opportunity in lending to underserved credit customers is huge. The company eventually aims to claim 2.5m customers, representing a small fraction of the addressable market of more than 70m people across its target geographies.
Business is humming along nicely. In the first quarter, customer lending grew by 12%, driven by strong performances in Poland, Romania, Mexico, and Australia. Bolstering the investment case, a £15m share buyback programme is due to commence imminently, and shareholders also benefit from a mighty 7.4% dividend yield.
All lending businesses face risks. However, International Personal Finance has a riskier customer base than most, given its inability to access conventional credit. That shouldn’t be ignored, but a cheap valuation and plenty of room for expansion make the risks tolerable in my view.
Charlie Carman does not own shares in International Personal Finance.
This story originally appeared on Motley Fool
