Now, often with losers like this, I simply accept that I got it wrong and cut my losses (it can be depressing to stare at losing positions in a portfolio). However, in this case, I’m holding on because I’m not ruling out an explosive comeback.

Why has this stock tanked?

Calnex is a technology company that specialises in testing and measurement solutions for the telecoms industry. Using its solutions, customers (such as BT and China Mobile) are able to validate the performance of critical network infrastructure (which is essential when rolling out and upgrading networks).

Now, this company previously had a great track record in terms of growth and profitability. When I invested back in 2021, its financials were absolutely brilliant.

However, in recent years, telecoms operators haven’t been spending a lot of capital on testing services. And this has led to a major slowdown in sales growth – and a huge drop in profitability – for the company.

For example, in FY24, revenue fell to £16.3m from £27.4m the year before. This drop in revenue led to its net profit falling from around £6m to near zero.

This fall in revenue and profits is why the stock has tanked.

Why growth could pick up

The good news is that conditions in the telecoms market have stabilised. As a result, the company’s revenues and profits are rising again.

For FY25, revenue was £18.4m. This financial year (FY26), analysts expect £20.4m.

I’m optimistic that at some stage, growth will accelerate, leading to a share price rally. After all, global telecoms networks are going to need massive upgrades to handle all the exciting technologies that are coming our way in the years ahead (self-driving cars, etc).

It’s worth thinking about how bad network reception is in some parts of the UK today. In more remote parts of country, it’s often non-existent!

Note that in its August AGM statement, Calnex pointed to innovation in the industry around 1.6Tb/s and high-speed application testing as potential growth drivers. 1.6Tb/s is the next generation of speed in high-speed networking and it’s essential to handle the demands of AI.

Opportunities in the defence industry

The story here isn’t just about telecoms though. You see, recently, Calnex has been expanding into other industries and markets including cloud computing, defence, space satellites, and the US Federal market.

I think the defence industry could be a source of growth for the company (especially with NATO countries set to spend more on defence). In its AGM statement, Calnex said that Network and Application Assurance (NAA) platform enhancements are unlocking additional opportunities in defence as complex network environments require high-quality test equipment.

I see potential

Now, there’s no guarantee that growth will pick up, of course. A risk is that companies in Calnex’s markets turn to competitors for testing products and services.

I see a lot of potential though and I’m backing the company – which is founder led – to turn things around. At 59p, I reckon this penny share is worth a closer look.

The post This 59p penny share is down significantly. But I’m not ruling out an explosive comeback appeared first on The Motley Fool UK.

Here, I’m going to highlight a penny stock that I hold in my portfolio today (it’s the only such stock I currently own). I see a lot of potential in this one and so do City analysts.

A tiny company

The pick I want to highlight is Calnex Solutions (LSE: CLX). It’s a leading provider of telecom network testing products and services.

It currently trades for 63p. At that share price, its market cap is around £55m, so we’re talking about a very small company.

Long-term growth potential

Now, I’ve held this one for a few years now, and it has been a wild ride (as is often the case with penny stocks). At one stage, I was sitting on great profits, yet today I’m in the red.

What went wrong? Calnex’s revenue and profit growth suddenly slowed on the back of a slowdown in telecoms industry spending – this hit the share price badly.

I continue to believe that the stock can deliver strong returns, however. For a start, I expect telecom network testing to pick up at some point. Today, 5G networks are still very primitive in many parts of the world. Here in the UK, I can’t even get 5G reception in many parts of London!

Secondly, the company has recently been moving into new markets such as defence, cloud computing, and satellites. I suspect the defence market may provide some compelling opportunities for the group in the years ahead, given that many European countries are ramping up their defence spending significantly.

It’s worth noting that in a recent AGM Statement the company stated that growing traction in the cloud and defence markets provides the board with confidence that performance this financial year (ending 31 March) will be in line with market expectations (analysts currently expect revenue growth of 11%). It added that because it now operates in a range of end markets, it’s not reliant on a recovery in the telecoms market for growth.

High risk, high reward

Now, I need to stress that this is very much a high-risk stock. Profits have tanked in recent years and there’s no guarantee that they’ll recover (they could fall further).

I think it’s worth at least taking a look as a high-risk, potentially-high-reward play, however. If earnings do pick up, the share price could fly and it has already started to move higher recently.

I’ll point out that founder and CEO Tommy Cook owns 20% of the company’s shares. So, it’s in his interests to kickstart growth and get the share price firing again.

Note that analysts at Canaccord Genuity currently have a 115p price target on the stock. That’s roughly 83% above the current share price.

The post This 63p penny stock could rise 83%, according to City analysts appeared first on The Motley Fool UK.

Recently, I scanned the market for penny stock opportunities to consider for 2025. Here are three shares that caught my eye.

DP Poland

First up, we have DP Poland (LSE: DPP). It operates the Domino’s Pizza chain in Poland and Croatia. This company’s growing rapidly. This year, revenue’s expected to come in at £53.7m versus £44.6m last year. For 2025, analysts expect revenue of £65.8m. That would represent growth of more than 20%.

If the company can continue to grow like this, its share price should rise. It’s worth noting that the company plans to open hundreds more stores in the years ahead – this should boost growth significantly.

Now, while Domino’s Pizza’s been successful in the US and the UK, there are no guarantees the brand will continue to do well in Poland and Croatia. Just because a product works in one market doesn’t mean it’ll work in another.

The company’s seeing success at present though, having registered year-on-year order growth of 15% for the first nine months of 2024. So I’m optimistic about its potential.

1Spatial

Next we have 1Spatial (LSE: SPA). It’s a tech company that helps government, utility, and transport organisations make sense of their geospatial (location) data.

This company’s grown at a healthy rate in recent years as it landed new customers. Between FY2019 and FY2024, revenues climbed from £17.6m to £32.3m. This had led to impressive gains for investors. Over the last five years, the share price has nearly tripled.

But what caught my eye is the fact that near-term earnings are projected to surge. For the year ending 31 January 2026, analysts expect earnings per share growth of a whopping 63%. That growth’s set to bring the valuation down significantly. At today’s share price, the forward-looking price-to-earnings (P/E) ratio’s only 26, which isn’t particularly high for a software company.

The risk with a business like this is that contract wins slow, which could lead to share price volatility. But the company believes it has a “huge opportunity” ahead, so I think it’s worth a closer look.

Calnex Solutions

Finally, we have Calnex Solutions (LSE: CLX). It provides test and measurement solutions for the global telecommunications and cloud computing markets.

This stock’s been a dog in recent years. I know, because I own a few shares and they’ve tanked. The problem has been challenging conditions in the telecoms market. These have led to a major slowdown in growth.

But I continue to see potential here. Calnex operates in an important, growing market. And the company believes it will return to growth in the second half of the financial year ending 31 March 2025. If it does, the shares could see a major re-rating.

Now, this stock’s high up on the risk spectrum. If conditions in the telecoms market remain challenging and growth doesn’t pick up, the share price could tank again.

Taking a three-to-five-year view however, I’m optimistic about the potential. Getting global telecom networks fit for the digital age is likely to require a lot of testing.

The post 3 high-risk/high-reward penny stocks to consider buying for 2025 appeared first on The Motley Fool UK.

Even Amazon was a penny stock at one point!

Today, I’ve identified two undervalued micro-cap shares I feel are worth considering. Could they be the next big thing?

Let’s have a look.

BATM Advanced Communications

BATM Advanced Communications (LSE: BVC) is a relatively small business that develops cybersecurity, diagnostics and networking products for healthcare, government and military agencies. It’s a fairly simple business but one I believe has growth potential. 

From military applications to laboratories and agriculture, there’s high demand for its products in today’s digitised world.

The company enjoyed a huge boost during Covid by developing home testing kits in partnership with Israeli diagnostics firm Novamed. But sales soon tapered off rapidly, wiping 85% off the share price since an all-time high of 140p.

It’s now unprofitable but has a good price-to-book (P/B) ratio of 1, lower than the UK telecoms industry average of 1.9. It holds a fairly decent amount of cash and $116m in equity with only $5m of debt, so its balance sheet looks good.

During 2023, revenue increased from $116m to $122m and is expected to grow to $143m by the end of this year. If it does, the company should become profitable within the next six months. I expect that would give the share price a boost.

However, with headquarters in Israel, the company faces operational risks. Conflict in the region could lead to supply and demand issues or limited financing options. That’s something worth keeping an eye on.

Still, I think it’s promising. Should a resolution to the conflict be found, it’s positioned well for growth.

Calnex Solutions

Calnex (LSE: CLX) designs instruments for testing telecom networks and data centres around the world. Some of its customers include Apple, Samsung, Huawei and AT&T.

Earlier this year, it ended a 12-year sales partnership with Spirent which accounted for much of its revenue. The decision came after Spirent accepted a £1.2bn takeover deal from US firm Keysight Technologies, which makes similar products to Calnex. The share price crashed heavily on the news but has recovered 18% since this year’s low.

In June, the company participated in a successful demonstration of a new low-cost 5G mobile capability called xHaul. The technology has several potential use cases in the development of next-generation mobile networks like 6G.

Calnex is only barely profitable, bringing in a meagre £40k worth of earnings the past year. Revenue and income both fell considerably in its latest earnings report. Still, it has no debt and is in a stable financial position. It also has a decent P/B ratio of 1.7, just below the industry average.

With new sales partners picking up its products, the company has decent growth prospects. It’s undervalued by 52% based on future cash flow estimates and earnings are forecast to grow 72% a year.

It might need some time to become the ‘next big thing’ but I like where it’s headed.

The post Penny stocks with promise! Could one of these little UK tech companies be the next big thing?  appeared first on The Motley Fool UK.

Macroeconomic issues and profit warnings

Calnex is a Scottish technology business. Its core offering is testing and measurement solutions to the telecoms sector. In simple terms, it helps telecoms businesses ensure the quality of their services.

Calnex shares haven’t exactly set the world alight in recent months due to macroeconomic volatility. To compound matters, the business provided a profit warning last month whereby it said profit would be 20%-30% lower than anticipated. The company said weakened demand for its services against the back drop of economic turbulence had hurt it.

I understand forecasts don’t always come to fruition, but missing by that much is never a good look, if you ask me.

Over a 12-month period, Calnex shares are down 61% from 154p at this time last year, to 59p, as I write. Since last month’s announcement, they’ve dropped 50% from 118p to current levels.

A turnaround on the cards?

It’s worth noting that Calnex had a great record of revenue and profit growth for the past few years. I reckon this is a prime example of not reading too much into past performance to gauge what could happen in the future.

Despite the recent doom and gloom, I think Calnex shares could potentially mount a turnaround. To start with, it can count some of the biggest telecom firms as customers. These include BT, AT&T, and Vodafone. Partnerships with large players in the market could help it mount a fightback.

The rollout of the 5G network could provide a vital boost to Calnex shares in the years ahead. Like all new critical infrastructure and tech, thorough testing is required to ensure service levels are up to scratch. The 5G rollout is set to continue for a number of years yet, so there is potential for Calnex to capitalise.

Calnex also said in its beleaguered update that it is hoping to return to revenue and profit growth for 2025. Plus, there’s an added motivation for the business to bounce back as its founder, Tommy Cook – still in charge of the business – owns more than 17m shares. I’m always intrigued when insiders running a business own shares. They’ve got their own hard-earned cash at risk so if that’s not motivation, I’m not sure what is.

High-risk but high-reward stock

There’s lots to like about Calnex despite falling into penny stock category. An established customer base, market trends such as the 5G rollout that could boost the business, as well as insiders owning shares are all positives. Furthermore, some well-known institutional investors are on board, such as JP Morgan. This could be a sign of faith in the business.

I’d be willing to buy some Calnex shares for my holdings when I next have some spare cash to invest. At just under 60p a share, I wouldn’t be buying loads, but enough to help diversify my portfolio. However, I understand that the short-term outlook is bleak. I’m a long-term investor so I’m prepared for a bit of pain along the way for long-term gains.

The post Could this falling penny stock soar once more due to the 5G revolution? appeared first on The Motley Fool UK.

Now, sometimes it can be sensible to bail out of underperforming stocks. However, in this case, I’ve done the opposite and bought more.

Profit warning

Calnex is a Scottish technology company that specialises in testing and measurement services for telecoms networks.

Its solutions are designed to help its customers (which include the likes of BT Group, Vodafone, and AT&T) validate the performance of the critical infrastructure associated with digital communication networks.

Until recently, Calnex had a really good track record when it came to growth. Between FY2018 and FY2023, for example, its revenue climbed from £8.4m to £27.4m.

It also had a good track record in terms of profitability. Over that aforementioned five-year period, return on capital employed (ROCE) averaged 27.4%.

However, in recent months, the company has been hit by a downturn in spending across the telecoms industry, with several customers delaying orders due to the weak economic backdrop.

As a result, it advised in October that revenues for the current financial year would be 20-30% below market expectations (a big miss).

Naturally, this profit warning sent the AIM-listed penny stock down sharply.

At one stage, it was trading near 40p – about 80% below its 2023 highs.

Taking a long-term view

After the recent profit warning, near-term broker forecasts don’t look great.

For the current financial year (ending 31 March 2024), revenue is expected to come in at £16.9m, down 38% year on year. Meanwhile, brokers expect zero earnings per share.

So, the short-term outlook is a bit of a write-off.

However, I’m a long-term investor, and taking a long-term view, I remain optimistic in relation to the company’s growth prospects.

The way I see it, demand for telecoms network testing services should be quite high over the next decade due to the rollout of 5G network technology.

This technology is complex in nature and requires comprehensive testing to ensure optimal performance.

It’s worth noting that according to Future Market Insights, the global communication test and measurement market is projected to grow by around 8% per year between now and 2033.

And Calnex has said that it’s confident of returning to growth in FY2025 and beyond.

Another reason I’m optimistic is that Calnex is led by founder Tommy Cook.

And he owns about 17.4m shares in the company (around 20% of the business).

So, it’s fair to say that it’s in his interests to turn things around and get the share price higher.

Other major investors include JP Morgan, Liontrust, and Sanford DeLand Asset Management, so there are some big-name investors onboard here (unlike a lot of other penny stocks).

Ultimately, I think this is a good company – with attractive long-term growth prospects – that is going through a challenging period right now.

That’s why I’ve bought more shares.

I’m backing it for success

This move could backfire on me, of course.

If we see further profit warnings, the shares may go lower.

One risk that concerns me a little is that customer concentration is high. Currently, Calnex’s top 10 customers account for around 50% of revenues. This isn’t ideal.

However, given the long-term industry outlook, I am prepared to take the risk with this stock.

I’m backing it to rebound in the years ahead.

The post Call me crazy, but I just bought more of this 60p penny stock appeared first on The Motley Fool UK.

However, I do invest a bit of capital in more speculative growth companies in the pursuit of explosive returns. With that in mind, here’s a look at three high-risk, high-reward stocks I’ve bought for my ISA.

An EV play

First up is Volex (LSE: VLX). It’s an under-the-radar UK manufacturing company that specialises in power cords and cables.

There’s no doubt that this stock is a higher-risk investment. Manufacturing is a cyclical industry meaning that it has its ups and downs. And downturns can be quite brutal for companies within the industry (businesses in this space often have high fixed costs).

However, on the rewards front, I see the potential for big gains. This is a company that makes products for a number of growth markets including the electric vehicle (EV) and data centre industries. So revenues and earnings should increase significantly in the years ahead.

And right now, the stock is dirt cheap. Currently, its forward-looking price-to-earnings (P/E) ratio is just 12. That’s the kind of valuation seen on a large-cap business with minimal growth.

So I’m excited about its prospects.

An e-commerce powerhouse

Next we have US-listed stock Shopify (NYSE: SHOP). It operates a subscription-based e-commerce platform that allows merchants to set up their own online stores easily.

This stock is risky for several reasons. One is that its valuation is sky-high. Currently, the forward-looking P/E ratio here is about 73.

Another is that it has historically been very volatile, so this is a stock that can experience wild swings.

Taking a long-term view however, I’m confident this stock will provide me with strong returns.

These days, new retail brands are popping up everywhere and turning to Shopify to power their online stores. I expect this trend to continue in the years ahead, driving revenues higher (analysts expect 24% revenue growth this year).

Ultimately, I see bags of potential in the long run.

A 5G rollout stock

Finally, we have Calnex Solutions (LSE: CLX). It’s a small company specialising in testing and measurement solutions for the telecoms industry.

This stock is risky because it has a market-cap of just £103m. Generally speaking, companies of this size tend to have volatile share prices.

Additionally, the company’s valuation is quite high right now. At present, the forward-looking P/E ratio is about 34.

On the reward side of the equation however, I see huge potential. The telecoms industry is likely to require a lot of testing and measurement services in the years ahead. Right now, networks are simply not equipped to handle a lot of new technologies being rolled out today (eg self-driving cars).

So I think Calnex is well placed for growth. And with a market-cap of just over £100m, and founder Tommy Cook leading the company, I see the potential for significant gains from here.

The post 3 high-risk, high-reward stocks I’ve bought for my ISA appeared first on The Motley Fool UK.

Ignoring growth stocks can be a mistake however, especially for those with a long-term investment horizon. Because picking the right growth stocks can lead to life-changing returns.

With that in mind, here are three top growth stocks to consider today.

Enormous growth potential

When it comes to growth companies, it’s hard to look past Amazon (NASDAQ: AMZN). Over the last decade, this company has grown its annual revenues from $61bn to $514bn. And investors have made a ton of money as a result.

Looking at Amazon today, I still see a lot of growth potential. This is a company that now operates in a wide range of exciting industries, including online shopping, cloud computing, digital advertising, video streaming, self-driving cars, artificial intelligence (AI), and digital healthcare.

So I expect it to get significantly bigger in the years and decades ahead.

The downside to this stock is that it has a lofty valuation. Currently, the forward-looking P/E ratio using the 2024 earnings forecast is about 45.

This stock has always been expensive though. And a high valuation hasn’t stopped it from delivering huge returns in the past.

The ultimate online shopping stock

Another growth stock with bags of potential to my mind is Shopify (NYSE: SHOP).

It operates a subscription-based e-commerce platform that allows merchants to set up their own online stores easily and start selling goods and services quickly.

In my view, Shopify is the ultimate play on the online shopping growth story.

These days, new brands are popping up everywhere and stealing market share from existing brands. So investing in individual retailers has become quite dangerous.

With Shopify though, investors become a part-owner of the e-commerce platform that so many of these new brands are using to run their businesses.

So no matter which brands win in the long run, Shopify investors should do well.

This is another stock with a high valuation. So I expect it to be volatile. Taking a 10-year view however, I think it will provide strong returns for investors.

A play on 5G

Turning to the UK market, one stock I’m very excited about is Calnex Solutions (LSE: CLX). It provides testing services to the global telecoms industry.

Telecom networks are going to require a huge build out over the next decade to handle new technologies, such as self-driving cars and remote robotic surgery.

Ultimately, 5G is the key ‘enabler’ of a lot of these technologies. And right now, 5G coverage across many countries, including the UK, is very poor (I’m reminded of this every time I take a train trip across the UK and there’s no internet for half the trip).

So I think the backdrop for Calnex looks very supportive.

It’s worth pointing out that while Calnex has generated strong top-line growth in recent years, momentum has slowed recently as a result of the weak macro environment.

And it’s possible that growth could continue to be sluggish in the near term. But over the long term, I expect this founder-led company to produce strong returns for investors.

The post Investing for the next 10 years? Here are 3 top growth stocks with bags of potential appeared first on The Motley Fool UK.

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Anglo Asian Mining 

What it does: Anglo Asian Mining is an AIM-listed mining share whose precious and base metals projects span the globe. 

By Royston Wild. Commodities are popular wealth preservers with investors during uncertain times. And by extension so are producers of raw materials like metals. This is why I believe Anglo Asian Mining (LSE:AAZ) could be a top investment for April. 

This UK mining share produces gold, silver and copper from its assets in Azerbaijan. It also owns a stake in Libero Copper & Gold Corporation, a business with precious and industrial metal assets in The Americas. 

The prices of Anglo Asian’s metals could continue climbing if worries about high inflation and a banking sector crisis persist. They could also keep rising if factory data from commodities glutton China impresses. Manufacturing PMI readings from the country soared to their highest in more than a decade recently. 

I think this small-cap stock is especially attractive for income investors. It carries a meaty 5.9% dividend yield at current prices.

Royston Wild does not own shares in Anglo Asian Mining. 

Atlantic Lithium

What it does: Atlantic Lithium is an Australia-based lithium exploration company, operating in West Africa.

By Alan Oscroft. Lithium for batteries is in great demand from the electric vehicle industry. But demand for shares in lithium explorers has gone off the boil.

Atlantic Lithium (LSE:ALL) has always been hard to value, as it’s not making any profit yet. But nearly all of the share price gains of 2021 and 2022 have now been reversed.

I suspect that’s more likely to be due to a turn away from growth stocks than anything else.

Forecasts suggest relatively small losses for this year and next. But there’s a profit down for 2025, putting the shares on a price-to-earnings (P/E) ratio of under six.

The company had cash of AU$19.1m at 31 December. So how long that will last and what new cash might be needed before profitability is reached looks like the big risk.

But I think I’m seeing a buying opportunity in this small-cap stock.

Alan Oscroft does not own Atlantic Lithium shares.

Bioventix

What it does: Bioventix is a UK biotech firm developing and supplying high-affinity diagnostic antibodies for the medical industry.

By Zaven Boyrazian. Bioventix (LSE:BVXP) is a biotech firm specialising in sheep monoclonal antibodies. These antibodies serve a pivotal role in human medical diagnostics, and are most commonly used on blood testing machines in hospitals and research labs.

Despite being a critical supplier to the healthcare sector, the firm took quite a stumble during the pandemic. With the industry primarily focused on tackling Covid-19, blood diagnostic antibodies weren’t exactly in high demand.

With Covid-19 no longer dominating hospitals, demand for Bioventix’s niche products is back on the rise. And thanks to its antibodies specialising in detecting vitamin D deficiency, pre-tax profits have returned to double-digit growth.

Bioventix looks like it’s back on track. And while trading at a P/E ratio of 25 is certainly not cheap, it may be a justifiable price given the small-cap stock’s long-term potential.

Zaven Boyrazian does not own shares in Bioventix Plc.

Calnex Solutions

What it does: Calnex Solutions is a Scottish company that specialises in testing and measurement services for telecommunication networks.

By Edward Sheldon, CFA. Calnex Solutions’ (LSE: CLX) share price took a big hit recently after the company warned that performance in FY2024 was likely to be below that of FY2023. It noted that in the current macro environment, some customers are taking a more cautious approach to investment decisions.

However, the company also said that it is confident that, as the industry spending cycle normalises, it will see an uplift in orders from the current, more subdued, levels. And looking further out, it said that it remains well placed to capitalise on the underlying long-term growth drivers in the telecoms and cloud computing markets. “We are well-placed to return to a growth trajectory once market confidence returns,” said founder and CEO Tommy Cook.

Given management’s confidence in the long-term growth story, I’m looking at the recent share price weakness here as a buying opportunity. I think it’s only a matter of time until growth picks up and the share price moves higher.

Edward Sheldon owns shares in Calnex Solutions.

Everyman Media Group  

What it does: Everyman Media Group is the owner of the premium cinema chain.  

By Charlie Keough. Everyman Media Group (LSE: EMAN) shares have failed to excite this year, down 15% as I write. Yet despite this, I think the future looks bright for the small-cap stock.  

2022 saw revenues increase by a whopping 62.5% compared to 2021. And while this might be expected given the impact of the pandemic, the 20% jump its latest revenues represents from the pre-pandemic year highlights Everyman’s strong growth.  

Last year also saw the business beat expectations with EBITDA coming in at around £14.5m. On top of this, it managed to maintain its market share with its 38 venues.  

Looking to this year, Everyman is set to open venues in five new locations, including the likes of Durham and Plymouth.  

Consumers tightening their belts may impact the business in the short term. But with a strong pipeline of releases lined up for 2023 alongside the unique service Everyman provides, the stock could present a solid opportunity in April.  

Charlie Keough does not own shares in Everyman Media Group.  

Everyman Media

What it does: Everyman is a premium and luxury chain of cinemas located across the UK.

By John Choong: With the cost-of-living crisis continuing to bite down on consumer spending, many would expect discretionary spending to take a hit. However, Everyman (LSE:EMAN) has bucked the trend with its premium experiences. Cinema goers don’t normally pay more than £10 per ticket, but at Everyman, customers pay upwards of £20 for luxurious and comfortable seats with at-seat service.

This proposition sets this small-cap stock apart from its competitors, as its products are catered towards more affluent spenders. As such, sales have managed to stay robust through difficult times. In fact, they’re expected to continue growing in the medium term as the UK’s fourth-largest cinema chain is anticipated to open another four venues this year. 

Combine the above with resilient retail sales data so far this year and reasonable multiples, and it’s not difficult to see why I’m keen on adding Everyman shares to my portfolio.

John Choong has no position in any of the shares mentioned.

Income & Growth VCT

What it does: Income and Growth is a venture capital trust that owns stakes in a variety of small and medium businesses.

By Christopher Ruane. A weak economy and rising interest rates could make this a challenging time for young businesses.

Some will still do well, though – and spotting them could be lucrative. That is what the fund managers at venture capital trust Income & Growth (LSE: IGV) aim to do. A recent successful example is the trust’s investment in software provider Tharstern. An investment of £1.5m has generated cash proceeds of £4m in under nine years.

Not all picks will be as successful. A difficult economy risks worsening investment results.

But the small-cap stock has a strong track record, and successful investments could help fund future dividends. The current yield is 10.7%. Dividends have moved around from year to year but have often been substantial.

I like the strong income potential and would be happy to buy the shares for my portfolio in April if I had spare cash to invest.

Christopher Ruane does not own shares in Income & Growth VCT.

Pensana 

What it does: Pensana is a rare earth metals company aiming to break China’s monopoly on the processing of the critical minerals. 

By Mark Tovey. Rare earths include a list of 17 chemical elements with strange names but familiar applications. Neodymium, for example, is used in the magnets that make smartphones vibrate. Promethium is needed in pacemakers.  

China is responsible for processing 85% of the world’s supply of rare earths. Outside of China, there are only two rare earth processing plants. That number will soon rise to three, thanks to Pensana’s (LSE:PRE) planned separation facilities in the Humber Freeport.  

For the project, Pensana received an undisclosed sum from the UK government. Western leaders are anxious to free the rare earths supply from China’s stranglehold.  

I plan to buy shares in Pensana, although it will only be a very small proportion of my portfolio. That’s because Pensana has no revenues, putting it at the mercy of capital markets. In addition, its neodymium-praseodymium mine in Angola could be struck by any number of geological or political catastrophes.  

Mark Tovey does not own shares in Pensana. 

Somero Enterprises

What it does: Somero Enterprises designs, assembles, remanufactures, sells, and distributes concrete leveling, contouring, and placing equipment.

By Paul Summers: Shares in laser-guided equipment maker Somero Enterprises (LSE: SOM) have sunk by 25% or so in the last year as the market has fretted over rising interest rates. The concern is that this will cause a recession in construction. Since Somero’s tech helps to lay perfectly flat floors, that makes sense.

As an existing shareholder, however, I’m not worried. In fact, I’m contemplating increasing my position in this high-quality, cash-rich company.

March’s full-year results read just fine to me. Revenue remained steady and profit dipped only slightly due to higher costs. 

This makes the valuation of a little over eight times earnings look like a steal. There’s even a monster 7% forecast dividend yield in the offing while I wait for the share price to recover. 

Although pure speculation on my part, I also wonder if we could see a few takeover bids in the near future.

Paul Summers owns shares in Somero Enterprises

The post Best British small-cap stocks to buy in April appeared first on The Motley Fool UK.

Here, I’m going to highlight three AIM shares that appear to have a lot of potential. I think these stocks are worth a closer look right now.

Ergomed

First up is Ergomed (LSE: ERGO). It’s an under-the-radar company that provides specialised services to the pharmaceutical industry. Founded in 1997, it operates in over 100 countries worldwide, serving some of the pharma industry’s biggest players.

A recent trading update showed that this business is performing pretty well at present. For 2022, the company generated revenue of £145.3m, up 22.5% year on year.

Meanwhile, the group said it started 2023 with a positive outlook. It noted that its order book growth provides strong revenue visibility.

We are confident in our future as a leading global provider of specialist pharmaceutical services underpinned by market-leading technology, and look forward enthusiastically to the coming year.

Ergomed management

Recently, Ergomed’s share price has experienced a bit of a pullback. I think this has thrown up a potential buying opportunity. The shares still aren’t super cheap (the P/E ratio is about 25). However, the risk/reward proposition here is now quite attractive, in my view.

Keystone Law

Keystone Law (LSE: KEYS) is the next AIM stock I want to highlight. It’s an innovative law firm that operates a scalable platform model.

Keystone shares have taken a huge hit recently on the back of recession fears. It seems investors are worried that an economic downturn will reduce demand for the company’s services.

A recession is a risk here, of course. However, the recent share price fall seems excessive, to my mind.

In a trading update last month, the company said the favourable market conditions reported in H1 FY2023 continued through H2 (the six-month period to 31 January), as client demand remained “robust”, resulting in another “strong performance”.

The company added it expected both revenue and adjusted profit before tax for FY2023 to be marginally ahead of market expectations.

Keystone Law shares currently trade on a P/E ratio of about 24. I think that’s quite reasonable, given the company’s growth potential.

Calnex Solutions

Finally, check out Calnex Solutions (LSE: CLX). It provides testing and measurement services to the telecoms industry.

This is an AIM stock I’m very bullish on. In the years ahead, the rollout of 5G networks (and the emergence of new technologies such as self-driving cars) is going to create high demand for test and measurement services that help companies prove that new systems operate effectively and conform to rigorous international standards.

As a leader in this space, Calnex is well positioned for strong growth. It’s worth noting that for the six months to 30 September 2022, revenue was up 38% year on year.

Looking beyond the growth potential here, one thing I like about Calnex is the fact that the company is led by founder Tommy Cook. Research shows that founder-led businesses often turn out to be good long-term investments.

This is another stock that isn’t particularly cheap. Currently, the forward-looking P/E ratio is about 26. The valuation risk doesn’t put me off however. I see huge potential here.

The post 3 AIM shares that are worth a look right now appeared first on The Motley Fool UK.