Just released: our 3 top small-cap stocks to buy in August [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a portfolio of at least 15 small-cap stocks.

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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.

Premium content from Motley Fool Hidden Winners UK

Our monthly Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of small-cap recommendations, to help Fools build out their stock portfolios.

“Best Buys Now” Pick #1:

Bloomsbury Publishing (LSE:BMY)

Why we like it: “Bloomsbury (LSE: BMY) owns the print rights for the Harry Potter books in the UK, and remarkably, the first book in the magical wizard series is the third-bestselling children’s book of this year, some 26 years after it was first published. Talk about valuable intellectual property! The company is also nurturing star author Sarah J Maas, publishing 15 titles so far by the popular fantasy novelist, whose catalogue of titles saw a whopping 51% rise in sales in the last year.

“But while strong sales of consumer titles are welcome, its non-consumer division – representing roughly 37% of total sales last year – could provide a substantial long-term growth driver. The company has transformed into a serious player in education in recent years. Through its digital platform – Bloomsbury Digital Resources (BDR) – the company provides educational resources to academic libraries and institutions. Bloomsbury expects that BDR should achieve organic sales growth of around 40% by 2027/28 – and it also represents a tantalising margin opportunity, in our view.”

Why we like it now: Bloomsbury recently announced record sales (up 15% to £264.1 million) and profit (up 16% to £31.1 million) for the fiscal year ending 28 February 2023, surpassing both market expectations and industry averages. This success is attributed to a surge in digital revenues and international expansion. The company’s long-term strategy of investing in digital content has paid off with a 41% sales growth in Bloomsbury Digital Resources (BDR), driven by both organic and acquired assets. Bloomsbury has recently signed four book contracts that could fuel earnings for the coming years. HBO Max announced a new Harry Potter TV series in April. A Bollywood adaptation of William Dalrymple’s The Anarchy is being planned, and The Three-Body Problem, the bestselling trilogy, is currently in production at Netflix. In recognition of the robust performance, the board has proposed a 10% increase in the final dividend to 10.34p per share, consistent with their progressive dividend policy. A recent trading update revealed that performance was in line with expectations for the first four months of the full year.

“Best Buys Now” Pick #2:

Redacted

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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.

The Motley Fool UK has recommended Bloomsbury Publishing Plc. 

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