Relatively upbeat

Shares in Verona Pharma (LSE: VRP) have soared by over 20% today after the company announced a successful placing to raise gross proceeds of £44.7m. The money raised will be used to fund a Phase 2b clinical trial in chronic obstructive pulmonary disease (COPD) for the company’s treatment called RPL554. Further Phase 2 studies for RPL554 in COPD and cystic fibrosis are also planned, with the money being earmarked for that use, too.

Clearly, the outlook for Verona Pharma is relatively upbeat and market sentiment is improving following a challenging year for the company’s investors. Even after today’s rise, shares in Verona Pharma are still down by 37% in the last year but with the company’s financial outlook being optimistic, that could be about to change.

Certainly, Verona Pharma is a smaller, high risk play which lacks the diversity of a major pharmaceutical peer. However, for less risk averse investors it could be worthy of a closer look – especially for the medium to long term.

A step-change in sentiment

Also increasing in value today are shares in STM (LSE: STM), with the financial services company recording a rise of 12%. That’s despite no significant news flow having been released by STM, with a rising wider market likely to be the major reason for improving investor sentiment in the stock.

Today’s rise is a step-change in investor sentiment for STM, with the company’s share price having fallen by 13% year-to-date even with today’s double-digit gains taken into account. And with STM forecast to increase its bottom line by 23% in the current year and by a further 33% next year, it would be somewhat unsurprising if the market continued to view STM more favourably.

This could lead to an upward rerating and with STM trading on a price-to-earnings growth (PEG) ratio of just 0.2, there is tremendous scope for this to take place over the medium to long term. Furthermore, due to STM’s yield of 3.1% and its forecast growth in dividends of 31% next year, it remains a sound income option for less risk averse investors.

Wide margin of safety

Meanwhile, shares in NAHL Group (LSE: NAH) are also among today’s biggest gainers. They are up by as much as 9% despite no significant news flow having been released by the company since its AGM statement in May. Encouragingly, NAHL reported back then that it was trading in-line with expectations, although its outlook remained uncertain given the prospect of regulatory change following the Chancellor’s Autumn Statement from 2015.

Looking ahead, NAHL is forecast to increase its bottom line by around a third next year. If met, this would put it on a forward price-to-earnings (P/E) ratio of around 8.2 which would indicate excellent value for money. And with a wide margin of safety, NAHL could be worth buying even though market sentiment is weak following its 26% fall in value over the course of the last year.

A superior risk/reward ratio?

Despite NAHL's appeal, it may be a good idea to take a closer look at this 1 Top Small-Cap Stock From The Motley Fool.

The company in question could make a real impact on your bottom line in 2016 and beyond. And in time, it could help you retire early, pay off your mortgage, or simply enjoy a more abundant lifestyle.

Click here to find out all about it - doing so is completely free and comes without any obligation.

Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.