Every month, we ask our freelance writers to share their top ideas for small-cap stocks to buy with investors — here’s what they said for April!
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Anglo Asian Mining
What it does: Anglo Asian Mining is an AIM-listed mining share whose precious and base metals projects span the globe.
By Royston Wild. Commodities are popular wealth preservers with investors during uncertain times. And by extension so are producers of raw materials like metals. This is why I believe Anglo Asian Mining (LSE:AAZ) could be a top investment for April.
This UK mining share produces gold, silver and copper from its assets in Azerbaijan. It also owns a stake in Libero Copper & Gold Corporation, a business with precious and industrial metal assets in The Americas.
The prices of Anglo Asian’s metals could continue climbing if worries about high inflation and a banking sector crisis persist. They could also keep rising if factory data from commodities glutton China impresses. Manufacturing PMI readings from the country soared to their highest in more than a decade recently.
I think this small-cap stock is especially attractive for income investors. It carries a meaty 5.9% dividend yield at current prices.
Royston Wild does not own shares in Anglo Asian Mining.
What it does: Atlantic Lithium is an Australia-based lithium exploration company, operating in West Africa.
By Alan Oscroft. Lithium for batteries is in great demand from the electric vehicle industry. But demand for shares in lithium explorers has gone off the boil.
Atlantic Lithium (LSE:ALL) has always been hard to value, as it’s not making any profit yet. But nearly all of the share price gains of 2021 and 2022 have now been reversed.
I suspect that’s more likely to be due to a turn away from growth stocks than anything else.
Forecasts suggest relatively small losses for this year and next. But there’s a profit down for 2025, putting the shares on a price-to-earnings (P/E) ratio of under six.
The company had cash of AU$19.1m at 31 December. So how long that will last and what new cash might be needed before profitability is reached looks like the big risk.
But I think I’m seeing a buying opportunity in this small-cap stock.
Alan Oscroft does not own Atlantic Lithium shares.
What it does: Bioventix is a UK biotech firm developing and supplying high-affinity diagnostic antibodies for the medical industry.
By Zaven Boyrazian. Bioventix (LSE:BVXP) is a biotech firm specialising in sheep monoclonal antibodies. These antibodies serve a pivotal role in human medical diagnostics, and are most commonly used on blood testing machines in hospitals and research labs.
Despite being a critical supplier to the healthcare sector, the firm took quite a stumble during the pandemic. With the industry primarily focused on tackling Covid-19, blood diagnostic antibodies weren’t exactly in high demand.
With Covid-19 no longer dominating hospitals, demand for Bioventix’s niche products is back on the rise. And thanks to its antibodies specialising in detecting vitamin D deficiency, pre-tax profits have returned to double-digit growth.
Bioventix looks like it’s back on track. And while trading at a P/E ratio of 25 is certainly not cheap, it may be a justifiable price given the small-cap stock’s long-term potential.
Zaven Boyrazian does not own shares in Bioventix Plc.
What it does: Calnex Solutions is a Scottish company that specialises in testing and measurement services for telecommunication networks.
By Edward Sheldon, CFA. Calnex Solutions’ (LSE: CLX) share price took a big hit recently after the company warned that performance in FY2024 was likely to be below that of FY2023. It noted that in the current macro environment, some customers are taking a more cautious approach to investment decisions.
However, the company also said that it is confident that, as the industry spending cycle normalises, it will see an uplift in orders from the current, more subdued, levels. And looking further out, it said that it remains well placed to capitalise on the underlying long-term growth drivers in the telecoms and cloud computing markets. “We are well-placed to return to a growth trajectory once market confidence returns,” said founder and CEO Tommy Cook.
Given management’s confidence in the long-term growth story, I’m looking at the recent share price weakness here as a buying opportunity. I think it’s only a matter of time until growth picks up and the share price moves higher.
Edward Sheldon owns shares in Calnex Solutions.
Everyman Media Group
What it does: Everyman Media Group is the owner of the premium cinema chain.
2022 saw revenues increase by a whopping 62.5% compared to 2021. And while this might be expected given the impact of the pandemic, the 20% jump its latest revenues represents from the pre-pandemic year highlights Everyman’s strong growth.
Last year also saw the business beat expectations with EBITDA coming in at around £14.5m. On top of this, it managed to maintain its market share with its 38 venues.
Looking to this year, Everyman is set to open venues in five new locations, including the likes of Durham and Plymouth.
Consumers tightening their belts may impact the business in the short term. But with a strong pipeline of releases lined up for 2023 alongside the unique service Everyman provides, the stock could present a solid opportunity in April.
Charlie Keough does not own shares in Everyman Media Group.
What it does: Everyman is a premium and luxury chain of cinemas located across the UK.
By John Choong: With the cost-of-living crisis continuing to bite down on consumer spending, many would expect discretionary spending to take a hit. However, Everyman (LSE:EMAN) has bucked the trend with its premium experiences. Cinema goers don’t normally pay more than £10 per ticket, but at Everyman, customers pay upwards of £20 for luxurious and comfortable seats with at-seat service.
This proposition sets this small-cap stock apart from its competitors, as its products are catered towards more affluent spenders. As such, sales have managed to stay robust through difficult times. In fact, they’re expected to continue growing in the medium term as the UK’s fourth-largest cinema chain is anticipated to open another four venues this year.
Combine the above with resilient retail sales data so far this year and reasonable multiples, and it’s not difficult to see why I’m keen on adding Everyman shares to my portfolio.
John Choong has no position in any of the shares mentioned.
Income & Growth VCT
What it does: Income and Growth is a venture capital trust that owns stakes in a variety of small and medium businesses.
By Christopher Ruane. A weak economy and rising interest rates could make this a challenging time for young businesses.
Some will still do well, though – and spotting them could be lucrative. That is what the fund managers at venture capital trust Income & Growth (LSE: IGV) aim to do. A recent successful example is the trust’s investment in software provider Tharstern. An investment of £1.5m has generated cash proceeds of £4m in under nine years.
Not all picks will be as successful. A difficult economy risks worsening investment results.
But the small-cap stock has a strong track record, and successful investments could help fund future dividends. The current yield is 10.7%. Dividends have moved around from year to year but have often been substantial.
I like the strong income potential and would be happy to buy the shares for my portfolio in April if I had spare cash to invest.
Christopher Ruane does not own shares in Income & Growth VCT.
What it does: Pensana is a rare earth metals company aiming to break China’s monopoly on the processing of the critical minerals.
By Mark Tovey. Rare earths include a list of 17 chemical elements with strange names but familiar applications. Neodymium, for example, is used in the magnets that make smartphones vibrate. Promethium is needed in pacemakers.
China is responsible for processing 85% of the world’s supply of rare earths. Outside of China, there are only two rare earth processing plants. That number will soon rise to three, thanks to Pensana’s (LSE:PRE) planned separation facilities in the Humber Freeport.
For the project, Pensana received an undisclosed sum from the UK government. Western leaders are anxious to free the rare earths supply from China’s stranglehold.
I plan to buy shares in Pensana, although it will only be a very small proportion of my portfolio. That’s because Pensana has no revenues, putting it at the mercy of capital markets. In addition, its neodymium-praseodymium mine in Angola could be struck by any number of geological or political catastrophes.
Mark Tovey does not own shares in Pensana.
What it does: Somero Enterprises designs, assembles, remanufactures, sells, and distributes concrete leveling, contouring, and placing equipment.
By Paul Summers: Shares in laser-guided equipment maker Somero Enterprises (LSE: SOM) have sunk by 25% or so in the last year as the market has fretted over rising interest rates. The concern is that this will cause a recession in construction. Since Somero’s tech helps to lay perfectly flat floors, that makes sense.
As an existing shareholder, however, I’m not worried. In fact, I’m contemplating increasing my position in this high-quality, cash-rich company.
March’s full-year results read just fine to me. Revenue remained steady and profit dipped only slightly due to higher costs.
This makes the valuation of a little over eight times earnings look like a steal. There’s even a monster 7% forecast dividend yield in the offing while I wait for the share price to recover.
Although pure speculation on my part, I also wonder if we could see a few takeover bids in the near future.
Paul Summers owns shares in Somero Enterprises