History has show that small-cap stocks can deliver some phenomenal gains. And while smaller British businesses have struggled compared to larger international enterprises in 2025, the expert analysts at Peel Hunt have highlighted several long-term opportunities that could help reverse this trend.
A rising oil & gas star
First on the list is Afentra (LSE:AET). The business focuses on acquiring and redeveloping mature upstream oil & gas assets in Angola. Its strategy is to apply modern operating procedures and technologies to maximise extraction rates and extend the production life cycle of oil & gas fields.
This unique approach to doing business has translated into an impressively low production cost per barrel. And when combined with additional discoveries near its core operations, the Peel Hunt team suspect the Afentra share price could surge to 85p if business continues with its current operating momentum.
Compared to where the small-cap’s trading today, that’s a 72% projected rise!
Of course, forecasts are never set in stone. And even with a bullish stance, the experts have still identified several key risks.
Beyond commodity price sensitivity, Afentra carries significant execution risk when it comes to identifying oil & gas assets as acquisition targets. After all, if the group fails to reach its expected extraction efficiency, the buyouts may not actually build shareholder value.
It’s also important to recognise that Angola, while not as bad as other countries, isn’t the most politically stable nation. And that can translate into a volatile regulatory environment, which can adversely impact Afentra’s operations.
Engineering opportunities
Another small-cap stock on Peel Hunt’s radar is Trifast (LSE:TRI). With a market-cap of just over £100m, the engineered fastening solutions and supply chain service business appears to have plenty of room for growth. And that opinion seems to be backed by the other analysts following this stock with an average share price target of 130p – roughly 73% ahead of current levels.
The bull case rests on management’s ability to restore profit margins through pricing action and supply chain optimisation. In fact, the company’s set a medium-term target of rebuilding EBIT profitability back above 10% from the 6.8% reported in its latest results, even with softer market conditions.
There are already some early signs of progress being made on this front, with leadership recently reiterating its margin objectives. And as end-market conditions begin to normalise, the business could begin an impressive recovery.
Having said that, this once again depends on execution risk. If management’s strategy to restore profitability fails, or renewed inflation emerges across input costs like freight, the self-help progress made could ultimately be offset.
Similarly, Trifast has little control over the cyclical nature of its end markets. And should the trading environment within key sectors like automotive and broader industrials remain softer for longer, investor sentiment could remain weak as the recovery journey is extended.
The bottom line
As we’ve recently seen with companies like Rolls-Royce investing early in a successful recovery story can be immensely lucrative. But out of these two Peel Hunt picks, Afentra looks like a more promising opportunity, in my mind. Therefore, I think investors exploring the world of small-cap stocks may want to take a closer look.
