4 small-cap stocks I’d buy to hold for the next 10 years

Here are four of my favourite small-cap stocks to buy in 2023. Here, I’ll explain what makes them terrific shares to own for the long term.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The London stock market is packed with terrific small-cap stocks. Here are four I’d buy for my own portfolio when I have spare cash to invest.

Redcentric

The British tech sector has tonnes of investment potential as the world becomes increasingly digitalised.

One hot growth trend of the next decade is the emergence of hybrid and remote working. An AT&T study suggests that 81% of workplaces will prioritise hybrid working by 2024. That’s up from 42% last year.

I’d buy shares in small-cap share Redcentric to capitalise on this booming market. This company provides a range of cloud, communications and security-based services to businesses. Latest results showed revenues soar 38.8% between April and September, to £61.5m.

I’d buy Redcentric even though it lacks the colossal R&D and marketing budgets of big industry beasts like IBM and Microsoft.

Atlantic Lithium

The electric vehicle (EV) industry is also tipped for staggering growth over the long term. Bloomberg analysis suggests there will be 66m of these low-emissions vehicles on the road by 2040. That’s up from just 3m in 2020.

Atlantic Lithium could be a lucrative way to capitalise on this market. That’s because the material it specialises in is a critical component in the batteries that make EVs run.

I like this particular lithium stock due to the quality of its Ewooya asset in Ghana. Drilling here continues to impress and last month said that fresh testing revealed the highest mineral grades to date.

I’d buy it despite the threat of development problems at Ewooya. These could have significant impact upon eventual earnings.

Facilities by ADF

Small-cap Facilities by ADF plays a critical role in bringing your favourite movies and TV shows to life. It supplies mobile make-up studios, production offices, catering vans and other vehicles that allow actors and production staff do their jobs.

The UK is becoming an increasingly popular destination for television and film production, creating exceptional revenues opportunities for the firm. And this month ADF made the transformative acquisition of equipment supplier Location One to enhance earnings growth.

ADF says the move will boost its plans of becoming “a one-stop-shop” to the television industry. Tough economic conditions pose a threat to production budgets in the near term. But I’d still buy this penny stock.

Zoo Digital Group

Sticking with the media theme, I think Zoo Digital will thrive as TV and film studios globalise their product. It is particularly well-placed to exploit the steady growth in streaming services (some of the company’s major customers include Netflix, Amazon and Disney).

The business adds subtitles, dubbing and voiceovers to make programming accessible to viewers around the world. It also provides other essential services like ensuring content is compliant across different regions.

The company sources 90% of revenues from overseas. This leaves profits vulnerable to exchange rate fluctuations. But I still think it’s an exciting small-cap to buy today.

Turnover at Zoo soared 91% between April and September, to $51.4m. It has a strong order book and continues investing heavily in R&D to keep revenues rolling in.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Amazon.com and Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

Why I think this month could be critical for the Lloyds share price!

Our writer explains why he thinks the bank's 2024 results will have a significant impact on the short-term direction of…

Read more »

British Pennies on a Pound Note
Investing Articles

This former penny share has soared 168%. Is the best yet to come?

When Christopher Ruane saw a penny share as a potential bargain last year, he was spot on. So having not…

Read more »

Mature couple at the beach
Investing Articles

£20k in an ISA? Here’s how it could generate £1 of passive income every hour — forever

With a long-term approach, Christopher Ruane explains how an investor could aim to earn a pound per hour in passive…

Read more »

One English pound placed on a graph to represent an economic down turn
Investing Articles

FTSE shares: overpriced or still a bargain?

Christopher Ruane reckons a storming FTSE 100 performance of late doesn't tell us much about whether there are still possible…

Read more »

Blue NIO sports car in Oslo showroom
Investing Articles

Would an investor have made money investing £2k in NIO stock 5 years ago?

Our writer looks at how NIO stock has performed over recent years and weighs the bull and bear cases as…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

5 steps to start buying shares with £5 a day

In a handful of steps, our writer explains how someone new to the stock market could start buying shares for…

Read more »

Man putting his card into an ATM machine while his son sits in a stroller beside him.
Investing Articles

3 essential factors for investors to consider when aiming for passive income success

Mark Hartley outlines three of the most important considerations investors are faced with when attempting to secure a lucrative passive…

Read more »

Investing Articles

£10,000 invested in Barclays shares 1 month ago is now worth…

Barclays shares have carried on where they left off in 2024, by climbing far faster than the FTSE 100. Harvey…

Read more »