The Motley Fool

Two small-cap growth stocks that could help you quit your job

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.

Champagne poured into a row of flutes
Image source: Getty Images.

While it’s relatively easy to make slow, steady, long-term gains in the stock market by investing in a broad selection of large, well-known companies, if you’re looking for life-changing gains, it can pay to invest a small proportion of your portfolio in fast-growing small-cap stocks that are a little more under the radar.

Today I’m looking at two companies that have delivered three-year gains of 170% and 330% respectively for investors. Are you seeing these kinds of gains in your portfolio?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...


DotDigital (LSE: DOTD) is a company I have owned for several years now. I bought the shares back in 2013 for around 24p, and today they change hands for 95p, so I’ve made quite a decent profit. However, I won’t be selling just yet, as I believe there could be more gains to come in the medium-to-long term.

Founded in 1999, dotDigital is a leading provider of tools for digital marketing professionals. Its core product ‘dotmailer’ is a handy piece of software that enables clients to effortlessly construct marketing emails. It’s used by thousands of businesses, including Barbour, Screwfix and Crystal Palace Football Club.

While DOTD has experienced powerful growth in recent years, investors have been concerned this year that new General Data and Protection Regulation (GDPR) would derail the group’s growth. As a result, the shares have spent much of 2018 in a short-term downtrend.

However, it looks like these fears were overdone, as the company advised in a trading update last week that revenues for the year ended 30 June had grown approximately 35% to £43.1m with recurring revenue surging 41%, and that customer numbers had grown by 26% over the year. It also said that it had seen “no material impact” on either email volumes or recurring revenues from existing clients, following GDPR implementation. The shares have jumped 30% in less than a week after the update, putting an abrupt end to the downtrend.

Looking at these results, it’s clear that Dotdigital still has considerable momentum, and trading on a forward P/E ratio of 24, I think they still offer plenty of value. I’ll be holding on for higher profits.

Learning Technologies

Another small-cap technology stock that I have my eye on is Learning Technologies (LSE: LTG), which specialises in providing technology-driven workplace learning solutions.

With a client base that is becoming increasingly populated with national governments and blue-chip firms, the group has delivered some pretty impressive growth in recent years, with sales rising from £15m to £52m over the last three years alone. And City analysts expect this powerful growth to continue in the near term with sales of £101m anticipated this year, after the group recently completed the “transformational” acquisition of PeopleFluent Holdings, a leading provider of cloud-based integrated recruiting, talent management and compensation management solutions.

A trading update released this morning has confirmed that the firm’s financial performance for the six months to 30 June 2018 is “in line” with market expectations. Management advised that revenues for the period are expected to be at least £27.3m (excluding the recent acquisition of PeopleFluent), a rise of 27% on last year, with organic revenue on a constant currency, like-for-like basis increasing approximately 10%.

I like the long-term story here. However, the shares do look a little pricey at present, trading on a forward P/E of 44. As such, I’ll be keeping the stock on my watchlist for now.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Edward Sheldon owns shares in dotDigital Group. The Motley Fool UK has recommended dotDigital Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.