There’s nothing tiny about UK small-cap shares. These companies can deliver some great returns and I expect next year to be no different.
So what am I buying? Here are six UK small-cap shares I think have great potential in 2021.
#1 – Covid-19 treatment
Instead of focusing on large pharma stocks, I’ve turned my eye to Synairgen. It’s a drug discovery and development company for respiratory diseases.
Synairgen’s Covid-19 treatment, SNG001 has been the star of the show. The drug is undergoing Phase II trials and so far the results have been positive.
The game-changer for me has been that the US regulator, the FDA, has awarded SNG001 a fast-track status, which means review times for the treatment will be shorter. The coronavirus pandemic has not been resolved yet and I expect 2021 to be a fantastic year for Synairgen.
#2 – Gold-miner
Greatland Gold shares have had a phenomenal year and I think this stock is well position for 2021. The miner has had a series of drilling successes, especially with its Havieron project due to its partnership with Newcrest.
Although the miner is still loss-making, I think it has strong potential in 2021 to deliver some great returns. I also expect gold to be in demand next year as the coronavirus crisis continues.
#3 – Video games
Another UK small-cap share is Keywords Studios. 2020 has been a strong year for gaming stocks as most people have been stuck at home during the coronavirus pandemic. Instead of making and releasing the games, the company offers services, such as art and audio, to other game houses.
Keyword Studios has a strong reputation in its field and works with major game distributors. It has recently upgraded it guidance for FY2020 and expects strong demand for its services to continue aided by upcoming console launches. I see potential for the shares to keep on rising.
#4 – Logistics
The coronavirus pandemic e-commerce boom has helped Clipper Logistics. While the stock is trading at an all-time high, I think it has further to go in 2021. Clipper offers a range of services such as warehousing and delivery to large retailers including ASOS and John Lewis.
The stock has a lot of momentum right now and I expect this to continue into next year. E-commerce is here to stay and the pandemic has been a catalyst.
#5 – The tech portfolio
For those, like me, who want exposure to upcoming tech companies, Draper Esprit is a fantastic stock. It’s a venture capital company with a portfolio of some of Europe’s fastest growing private, pre-IPO businesses.
Tech is here to stay especially after Covid-19. The management team has successfully displayed its ability to identify, invest and exit companies. I think Draper Esprit is a good way to diversify tech exposure in a portfolio.
#6 – Currency risk
Another UK small-cap share I like is Alpha FX. It’s a founder-led financial services firm that helps companies manage currency risk. Some of its clients include Holland & Barrett and Halfords.
The firm has grown at a phenomenal rate and recent trading updates suggest there’s continued strong demand for its services. Given the uncertainty of 2021, I expect companies will want help with currency risk management. This places Alpha FX in a prime position and I believe the shares will continue to soar from here.
