3 UK small-cap shares I’d buy to hold for 10 years!

Here are three small-cap shares I’d buy if I have spare cash to invest. I believe they could deliver spectacular long-term returns.

| More on:

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.

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.

Image source: Getty Images

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.

I’m searching for the best small-cap shares to add to my investment portfolio. Here are three I think could enjoy excellent earnings growth over the next decade.

Begbies Traynor

Investing in UK-focused shares can be risky as economists tip prolonged weakness in the domestic economy. Yet Bebgies Traynor (LSE:BEG) is a stock that could thrive in this landscape.

You see, this company’s operations are about as counter-cyclical as it gets. Demand for its insolvency services is currently soaring as the number of firms experiencing financial distress unfortunately balloons. The AIM share recently announced that “we continue to take an encouraging level of new insolvency appointments across all market segments”.

This week, web-hosting business GoDaddy predicted that as many as 630,000 small and micro businesses could go bust this year. Companies of all sizes are struggling as consumers cut spending, and rising energy bills from April will heap extra pressure on British firms.

Naturally, trading activity at Begbies Traynor could fall as economic conditions improve. But I believe the firm’s aggressive expansion strategy should still deliver excellent long-term earnings growth. Just this month, it paid £400,000 to acquire chartered surveyors Mark Jenkinson & Son.

Frontier Developments

Games developer Frontier Developments (LSE:FDEV) has been having a tough time of late. Its share price slumped in January when it downgraded revenues and profits forecasts due to disappointing festive trading.

Weak sales remains an ongoing danger for the small-cap share too. Not only could turnover suffer as the cost-of-living crisis endures. Intense competition in the video games market is a threat that will never go away.

Frontier shares however, still appeal to me as a long-term investor. The video games market is already bigger than the movie and music industries combined and tipped for further stratospheric growth.

Frontier has shown it has what it takes to make a splash in the industry too. Popular titles include the Jurassic World, F1 Manager and Elite Dangerous, and the business is rapidly increasing its headcount to grow its games portfolio.

Vertu Motors

Demand for big-ticket goods often sinks when economic conditions worsen. So profits at car retailer Vertu Motors (LSE:VTU) are in danger of sustained weakness as the cost-of-living crisis endures.

Despite this, the business could be supported by a surge in demand for electric vehicles (EVs). The Society of Motor Manufacturers and Traders believes 500,000 of these vehicles will be sold in 2022. That’s up from the record 452,527 that hit the road last year.

Consumers are more likely to buy these new-age vehicles from showrooms as well. As a result, Vertu — which has almost 200 sales outlets across the country — is well positioned to win plenty of customers.

There are signs that the EV market is set for strong and sustained growth in the future. I’m expecting this small-cap share to make big profits in the process.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Begbies Traynor Group Plc, Frontier Developments Plc, and Vertu Motors Plc. 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

Person holding magnifying glass over important document, reading the small print
Investing Articles

3 UK stocks I reckon could benefit from the upcoming general election

As the general election hurtles towards us, this Fool wonders which UK stocks could benefit, and focuses on three picks…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

At 11%, this dividend share pays the biggest yield in the FTSE 100

When a dividend share offers a big yield, we need to be cautious of the risks. But I reckon this…

Read more »

British Isles on nautical map
Investing Articles

I reckon Hiscox shares could be one of the best bargains on the FTSE

I've been investing in FTSE companies for years, but after a major decline I've not seen a company with as…

Read more »

Grey Number 4 Stencil on Yellow Concrete Wall
Investing Articles

4 reasons I’d still buy National Grid shares in a heartbeat despite the recent wobble!

As National Grid shares plunged on the news of a right issue, I’m not flinching, and reckon it's a top…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

After gaining 45% in 12 months, is the Amazon share price now overvalued?

Our author thinks the Amazon share price might be too high. While the long-term future of the business looks bright,…

Read more »

Investing Articles

2 hot dividend stocks I’d buy and hold for 10 years

Our writer reckons these two dividend stocks could help her bag juicy dividends for years to come and explains why.

Read more »

British Pennies on a Pound Note
Investing Articles

2 dividend-paying penny shares I’d happily own

These two penny shares have caught our writer's eye for a combination of income prospects now and business growth potential…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

This FTSE 250 share looks like a bargain to me!

This FTSE 250 share has seen its price tumble due to chaotic local economic conditions in a key market. But…

Read more »