Just released: our 3 top small-cap stocks to buy in April [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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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.

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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:

Polar Capital (LSE:POLR)

Why we like it: Polar Capital (LSE: POLR) is a London headquartered fund management company that boasted £19.2bn in assets under management (AuM) as of January 2024. While the investment management space often gets a bad rap – with the assumption that it charges high fees for poor performance – we have no problem recommending asset managers with long-term, Foolish investment styles, and believe that Polar’s technology and healthcare focus is appealing.“One of the attractions of fund management businesses is that they have massive operational leverage. Revenues typically grow at a rate that’s proportional to AuM, although costs stay much the same, so profits should grow at a faster rate. In the good times, when markets rise and revenues surge, then the company’s profits should grow even faster – which could potentially make owning the business a proxy for the market’s progress.”

Why we like it now: The last 12 months have seen technology stocks rise, as macroeconomic worries eased and investors have again appreciated the qualities of businesses that boast potentially world-changing technologies. Amid that backdrop, Polar Capital’s investment performance was strong in its third quarter, resulting in investment gains of £2.1bn. Performance fees jumped by 5x to £9.6m, which should give a boost to full-year earnings. My feeling is that many businesses in Polar’s universe might benefit from transformational technologies – such as AI – and that investors could also want to benefit from these themes in the long run. This should benefit Polar’s business both if the valuation of its investments improve and its funds see improving demand. Its forward P/E of around 11 could offer good value for patient investors willing to hold the business across the market cycle.

“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 Polar Capital Plc. 

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