The sleepy computer boards business turned high-performance defence hardware specialist has surged from 81p to over 270p today – a 233% increase in just over two years, vastly outpacing larger defence companies such as BAE Systems.

But is this just speculation? Or could it be the beginning of an even larger bull run? Let’s find out.

What’s behind the 230% surge?

There are a lot of forces at play supporting Concurrent’s business. The most obvious is the rapid rise in defence spending across European nations and NATO members.

However, there’s also a more subtle tailwind boosting this business. The now-called US Department of War has enacted the Sensor Open Systems Architecture (SOSA) mandate. This requires all new military computing hardware to use an open rather than proprietary architecture that defence contractors have historically produced.

SOSA breaks the business model of locking militaries into expensive ecosystems. But since Concurrent’s built its entire product range to be SOSA compliant, the firm’s far ahead of the curve while incumbents are busy transitioning their hardware systems and nursing significant technical debt.  

The result has been a massive inflow of new defence contracts, resulting in a record order book, record sales, and record profits – all of which are continuing to grow.

With that in mind, it’s no wonder Concurrent’s stock price has more than tripled, lifting the business out of penny stock territory. And with only one professional analyst following this business, even more explosive growth could emerge as more experts begin to discover the small-cap stock.

So is this a no-brainer buy?

Where’s the risk?

Concurrent has an impressive growth trajectory ahead. But like all stocks, there are some notable risks to keep an eye on. The firm’s surging order book clearly demonstrates that Concurrent is making the right moves to attract new and retain existing defence customers. But it’s also a double-edged sword.

Scaling up manufacturing capacity is no easy task. And while the company’s trying to stay ahead of this, the business has already encountered delays in the UK due to issues with planning permission.

So far, this seemingly hasn’t impacted order fulfilment. And management’s devised a workaround that’s expected to complete its capacity expansion efforts by mid-2026.

Yet any further holdups could result in customer orders being set back. This would hurt newly formed customer relationships and undermine the group’s SOSA-driven first mover advantage versus larger defence contractors.

The bottom line

Concurrent has a rare opportunity right now to secure new long-term relationships with the US and European militaries. But proving itself to be a reliable partner is critical to long-term success. Otherwise, customers could just switch back to industry incumbents once they catch up to SOSA.

Put simply, there’s still a lot of execution risk surrounding this business. But with management proving to be quite capable and finding a relatively rapid solution to its planning permission problems, it’s a risk I’m tempted to take. And it’s not the only ex-penny stock on my radar this month…

The post A surging ex-penny stock to buy for the defence spending revolution? appeared first on The Motley Fool UK.

There are a number of small-cap UK defence stocks that have delivered far higher returns over the last six months, however. Here are three to check out.

Advanced space technology

First up, we have Filtronic (LSE: FTC), which is up about 50% over the last six months. This is a technology company that specialises in advanced wireless communication solutions.

It’s had a lot of success in recent years selling wireless components to SpaceX. It’s now having success selling satellite and sensor hardware to defence businesses.

For example, in December, the company won a £11m contract with a major defence prime. “This latest win deepens our engagement with a key European defence customer and strengthens Filtronic’s position in the defence sector, a growing market for the group,” said CEO Nat Edington at the time.

After its recent run up, this stock looks a little expensive. The forward-looking price-to-earnings (P/E) ratio is now over 50 – this doesn’t leave any room for an operational setback (eg the loss of a key customer).

Taking a five-year view, however, I see a lot of potential. So, I think the stock is worth considering.

Nuclear radiation protection

Next, we have Kromek (LSE: KMK), which is up about 150% over six months. It provides nuclear radiation detection solutions to the global defence and security markets.

Its product portfolio ranges from personal, handheld, and wearable devices to systems that can be mounted on remotely operated vehicles (ROVs) or drones. Note that the company has worked in partnership with the US Department of Defense’s Defense Threat Reduction Agency (DTRA) and the Defense Advanced Research Projects Agency (DARPA) to develop high quality products and solutions that meet the needs of leading players in the defence and security industries.

I think this company has a lot of growth potential and is worth a closer look. It could do well in the years ahead as governments spend more on defence (note that sales in its chemical, biological, radiological, and nuclear defence (CBRN) segment more than doubled in the first half of the current financial year).

That said, this is a very small business and profits could be up and down. So, the stock could be volatile.

Rugged computing products

Finally, we have Concurrent Technologies (LSE: CNC), which is up about 50% over six months. It makes rugged high-performance computing products designed for the defence and aerospace markets.

This company has a lot of momentum at present. In January, it told investors that it generated double-digit growth for 2025 and that total order intake for FY25 was a record £47m (versus £41m in 2024).

It added that it has started 2026 with good momentum, underpinned by robust customer demand, record order intake, and a growing pipeline of design wins that are expected to convert into production revenues. This all sounds very promising.

The forward-looking P/E here is about 35, so again, we have an expensive stock that doesn’t have a lot of room for error. However, with earnings per share expected to grow by around 20% this year, it could still be worth a look.

The post 3 small-cap UK defence shares that are crushing BAE Systems and Rolls-Royce appeared first on The Motley Fool UK.

Yet even after these successful businesses leave penny stock territory and become established small-caps, there’s often still plenty of explosive growth potential left. And that’s what’s brought Concurrent Technologies (LSE:CNC) onto my radar.

Following a strategic and leadership pivot in 2021, this enterprise transformed itself from a sleepy computer boards business into a defence hardware specialist. And while the transition wasn’t smooth, it finally reached a critical inflexion point at the start of 2024 that’s since seen the share price almost triple!

Yet with defence spending still on the rise, this explosive performance could be just the tip of the iceberg.

The bull case

Concurrent’s strategic pivot was designed to capitalise on one major regulatory shift – the Sensor Open Systems Architecture (SOSA) mandate.

Historically, most defence contractors have designed their IT systems to be proprietary to lock customers into their ecosystems. This generated substantial pricing power. But for the military, it created enormous headaches. Most notably, components that became unavailable or unsupported forced entire systems to be redesigned and requalified, driving up costs and creating technological drag in the process.

SOSA fixes that by requiring systems to be open and compatible with other systems, keeping costs low and enabling deployed defence technology to keep up with innovation.

That’s exactly what Concurrent now specialises in. And without being dragged down by the technical debt of legacy solutions like most of the leading defence contractors, the business has had little trouble securing new orders and outmanoeuvring the competition.

The result? Record revenues, profits, and order intake. And with the added tailwinds of NATO rearmament, the company appears on track to continue thriving in the coming years.

What to watch

Looking back, the decision to go ‘all-in’ on defence was prudent and indicates good foresight on behalf of management. However, while the business looks well-positioned to continue capitalising on rising defence spending, there are nonetheless still significant execution risks.

To keep up with the rapid expansion of its order book, the company’s in the process of expanding its production capacity at its UK manufacturing site. However, so far, this hasn’t gone smoothly. Challenges with planning permission have created delays, slowing the whole process. And in December, management announced yet another delay to its planned facility expansion.

To be fair, the company also came up with a novel solution of moving its office workers to a new building nearby and reconfiguring its existing space for manufacturing. This new plan’s expected to be executed during the first half of 2026.

But if delays emerge once again, the order book could start growing for the wrong reason – fulfilment disruption. And that, in turn, could result in the group’s momentum slowing, taking its share price with it.

The bottom line

The stage is set for this ex-penny stock to evolve into a serious contender within the defence sector. And with Concurrent barely scratching the surface of its market opportunity, it’s definitely a business worth taking a closer look at.

Obviously, not everyone may be comfortable with investing in the defence sector. But luckily, Concurrent isn’t the only small-cap opportunity I’ve spotted in 2026.

The post 1 surging ex-penny stock to buy for the defence-spending revolution? appeared first on The Motley Fool UK.

Let’s find out why these five Fools parted ways with some of their investments.

Concurrent Technologies

What it does: Concurrent produces computer boards and other embedded systems for use in critical applications such as military equipment.

By Roland Head. I bought shares in Concurrent Technologies (LSE: CNC) for my ISA in 2021 and 2022. I expected to hold them for years, but I sold my entire holding a few weeks ago.

Why? Although the company appears to be trading well, I think the story has changed since I invested.

When I bought the shares, Concurrent had a committed dividend policy and a cautious approach to growth.

Admittedly, the company was probably a bit sleepy. But I felt that newly arrived chief executive Miles Adcock was likely to fix these problems and improve performance.

What’s actually happened is that Dr Adcock has taken a more aggressive approach to growth than I expected.  The dividend has been cut drastically to free up cash, and the company is expanding through acquisitions as well as organically.

I think this strategy may be successful, but it’s not what I signed up for. That’s why I sold these UK shares.

Roland Head does not own shares in Concurrent Technologies.

CVS Group 

What it does: CVS Group operates around 500 veterinary surgeries across the UK, Ireland, Australia, the Netherlands. 

By Royston Wild. The animal care market is booming as pet ownership steadily increases. It’s why I’ve been buying shares in UK-listed CVS Group (LSE:CVSG) in recent years. 

However, I slashed my holdings in the company in early September and removed my ‘buy’ rating on the stock. This follows the Competition and Markets Authority’s (CMA) decision to probe the British veterinary services industry. CVS generates the lion’s share of profits from these shores. 

The watchdog will look at issues like price transparency and whether practices adequately state if they are part of a wider group. In short, the probe could have large implications for CVS Group, a company which has steadily grown earnings through acquisitions.

It’s also possible that the CMA’s report due in 2024 could have little impact on the Alternative Investment Market (AIM) company’s investment case. Still, buying its shares at this moment requires a huge leap of faith from investors. I think there are safer ways to try and capitalise on the growing petcare market.

Royston Wild owns shares in CVS Group.

Rolls-Royce 

What it does: Rolls-Royce is a British engineering giant focusing on civil aviation, power systems, and defence. 

By Dr James Fox. I recently sold my shares in UK behemoth Rolls-Royce (LSE:RR.) as it was becoming clear to me that there were clearer value picks elsewhere on the FTSE 100. 

But it wasn’t an easy decision. Rolls-Royce still looks like an attractive proposition when observing long-term forecasts, especially in civil aviation. 

OEMs Boeing and Airbus see as many as 40,000 new aircraft being added to the global fleet internationally by 2042. 

This represents a huge market for Rolls, assuming it can expand its offer for narrow-body aircraft – traditionally the company’s engines are used on wide-body craft. 

However, there is something speculative about the recent surge. There remains plenty of unknowns as the company recovers from the impact of the pandemic, and some risks, including the impact of a global economic downturn on travel demand. 

My weighted buying price for the stock was around 95p. So Rolls was good for me, but I believe the momentum is slowing. 

James Fox does not own shares in Rolls-Royce.

Tritax Big Box REIT

What it does: Tritax Big Box REIT is a real estate investment trust that owns a portfolio of logistics warehouses.

By Edward Sheldon, CFA. Recently, I sold my holding in Tritax Big Box REIT (LSE: BBOX). I ended up selling the stock for around the same price as I bought it for. However, after dividends are factored in, I came away with positive returns.

Why did I sell? Well, the main reason was that I wanted to free up some cash to take advantage of other opportunities.

I still like Tritax Big Box a lot. It offers an attractive dividend yield, and in the long run, it should benefit from the growth of online shopping.

However, with interest rates now at a much higher level than they were a few years ago (when I bought the stock), the medium-term outlook for the property company has become a little more clouded, in my view.

As for where I reinvested the proceeds of my sale, I put the capital into Hargreaves Lansdown shares.

Compared to Tritax Big Box shares, they were trading at a lower valuation, with roughly the same dividend yield. And higher interest rates are a plus for Hargreaves, as they are creating more interest in the company’s Active Savings products.  

Edward Sheldon owns shares in Hargreaves Lansdown

Yellow Cake

What it does: Yellow Cake is a fund that gives investors exposure to uranium oxide, a key component in nuclear energy.

By Mark Tovey. When I invested in Yellow Cake (LSE:YCA) in early 2022, I had expected to hold for five years.

I was bullish on the uranium price because of figures suggesting a looming supply squeeze. The roughly 440 nuclear reactors globally gobble up more uranium than is extracted by mines each year. At the same time, there are over 50 new reactors under construction worldwide.

My thesis was simple: the price of uranium would have to rise to bring more miners online.

Yellow Cake’s stock price started 2022 at 340p and peaked at 560p this year.

While many uranium bulls believe this is just the beginning of an epic moonshot, I’m not convinced. The uranium spot price has already hit my target of $75 per pound, a figure I’d seen reported as being sufficient to bring on enough supply to meet the growing demand.

Uranium prices could still rise due to slow supply growth, but having met my price target, I opted to exit.

Mark Tovey does not own shares in Yellow Cake.

The post 5 UK shares that Fools have recently sold appeared first on The Motley Fool UK.

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

Concurrent Technologies

What it does: Concurrent designs, builds, and supplies central processing unit boards, computer inter-connections, and computer systems to a variety of industries, mainly telecoms, aerospace, and defence.

By John Choong. On the back of a terrible year for chip manufacturers, Concurrent Technologies (LSE:CNC) shares could be about to ride the rebound with the rest of the industry. Its bigger peers like TSMC and AMD have signalled a bottom in the decline of chip demand, with growth expected from H2 onwards.

Concurrent’s latest trading update pretty much supports this sentiment. Management reported a record order book worth more than £31m. As such, the board is expecting to see significant revenue growth this year as it plans to increase its production capacity, and get its free cash flow back to positive levels.

Although its current and near-term forward multiples don’t exactly scream a bargain, it’s worth noting that those metrics only have a one-year time horizon. But because I plan to invest over a longer period, I’m looking beyond that. And given its earnings potential, buying the small-cap stock now could present quite a decent upside.

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

EKF Diagnostics

What it does: EKF Diagnostics is a leading global medical manufacturer that specialises in point-of-care testing equipment and central laboratory devices.

By Edward Sheldon, CFA. There are a few reasons I’ve chosen EKF Diagnostics (LSE: EKF) here.

One is that the company is expected to generate solid revenue and profit growth this year. For 2023, City analysts expect revenues to climb 8% year on year and net profit to rise nearly 60% year on year.

Another reason is that the healthcare diagnostics industry is relatively recession-proof. EKF’s products are used in hospital and research laboratories, doctor’s offices, and blood banks in more than 100 countries. I’d expect demand for its products to remain stable if economic conditions deteriorate from here.

Of course, as a small-cap stock, EKF Diagnostics could be a volatile investment. I’d expect its share price to fluctuate a fair bit. However, with the stock currently trading well below its all-time highs, I like the risk/reward proposition on offer.

Edward Sheldon has no position in EKF Diagnostics

Everyman Media Group 

What it does: Everyman is the owner of the eponymous UK cinema chain. 

By G A Chester. The share price of Everyman Media Group (LSE: EMAN) is some 35% lower than this time last year. And its market value has halved from its level before the pandemic. 

Yet the company has just reported 2022 revenue over 20% higher than in the pre-pandemic year. Plus EBITDA (earnings before interest, tax, depreciation and amortisation) ahead of market expectations — a recovery taking it back to near its pre-pandemic level. 

This premium cinemas chain ended 2022 with 38 venues. Management told us its “cognisant of the difficult macroeconomic environment and consumer backdrop,” but said performance in the new financial year has been encouraging. And with plans to open a further five venues in 2023, and both the volume and quality of new film releases expected to increase this year, the directors said they “continue to have significant confidence in the future.” A risk here is if this confidence turns out to be over-optimistic, of course. 

G A Chester does not own shares in Everyman Media Group.

Fonix Mobile

What it does: Fonix is a unique consumer-friendly mobile payments business targetting the media, gaming, ticketing, and transport sectors.

By Zaven Boyrazian. As we move toward a cashless society, digital payment companies like Fonix Mobile (LSE:FNX) are riding on impressive tailwinds. The business provides a relatively unique mobile payment solution whereby small transactions can be completed, and the cost added to a user’s mobile phone bill. And it’s proving to be exceptionally popular.

Over 18 million people in the UK actively use Fonix’s payment solution, translating into a five-year average revenue growth rate of 25%, with operating margins steadily expanding.

Worryingly, the small-cap stock’s top 10 merchants are responsible for 85% of Fonix’s gross profits. Needless to say, that’s a fairly large client concentration risk.

But given that the firm hasn’t lost a single merchant from its platform in the last five years, these relationships seem pretty sticky. And given the potentially explosive long-term gains, opening a small position in my portfolio could prove highly lucrative in the long run despite the high risk.

Zaven Boyrazian does not own shares in Fonix Mobile.

hVIVO

What it does: hVIVO is a contract research organisation (CRO) that tests vaccines using human challenge clinical trials.

By Ben McPoland. The Covid pandemic has ushered in a wave of research and development spending focused on infectious and respiratory diseases. One company benefiting from this is hVIVO (LSE: HVO), a world leader in designing and running human challenge clinical trials.

Indeed, the firm conducted the world’s first such trial for the coronavirus back in 2021. These studies involve exposing healthy volunteers to the actual pathogen a vaccine is being tested for by biopharmaceutical companies. Its clients include four of the top 10 global biopharmas. 

Management expects record revenue of £50.6m for 2022, representing 30% growth year on year. That’s with minimum EBITDA margins of 17%. Its order book is bulging, up 65% year on year with contracted revenue reaching £76m by the end of December. 

Yet the small-cap stock is down 55% since reaching 38p back in April 2021. With a market cap of £113m or so, investors can expect share price volatility. 

Ben McPoland owns shares in hVIVO.

Income and Growth VCT

What it does: Income and Growth is a venture capital trust that invests in a range of early stage companies.

By Christopher Ruane. Over the past year, shares in Income and Growth (LSE: VCT) have fallen 17%. I think that makes now an attractive moment for a long-term investor like me to buy the shares, which I would do if I had spare cash to invest.

The trust aims to pay an annual dividend of at least 6p per share. Although dividends are never guaranteed, last year it exceeded the target with an 8p per share payout. That means the shares currently yield over 10%. I find that very attractive, while recognising that the dividend may jump around quite a bit from year to year.

Investing in growing companies at an early stage has helped it fund lucrative shareholder distributions. If the trust’s holdings suffer in the recession, that might hurt earnings. But over the long term, I think exposure to growth stories could help the trust profit – and hopefully pay large dividends.

Christopher Ruane does not own shares in Income & Growth.

Keystone Law Group

What it does: Keystone is a full-service law firm with 400+ lawyers that embraces technology and modern working practices.

By Charlie Carman. Keystone Law Group (LSE:KEYS) is an AIM-listed company, whereas the vast majority of law firms are limited liability partnerships. Accordingly, Keystone offers a rare opportunity for investors to gain legal industry exposure in their portfolios.

The half-year 2023 interim results make for positive reading. The firm delivered revenue of £36.8m, which represents a 9.3% increase over H1 2022.

In addition, operating cash conversion of 101% and the absence of debt bodes well for the dividend. The last interim dividend was 5.2p per share.

The firm also continues to attract talent as experienced lawyers increasingly look for flexible career opportunities beyond the traditional law firm model.

Granted, there’s a risk client legal expenditure could come under pressure in an economic downturn. Nonetheless, Keystone shares have halved in value over the past 12 months, and I’d like to enter a position while I can still buy the shares in this small-cap stock at a bargain price.

Charlie Carman does not own shares in Keystone Law Group. 

Ramsdens Holdings

What it does: Middlesbrough-based Ramsdens Holdings is a diversified financial services provider and retailer.

By Paul Summers. In contrast to most UK stocks, Ramsdens Holdings (LSE: RFX) enjoyed a very good 2022. As I type, the share price is up 25% over the last 12 months. There might be more gains ahead.

Recent trading has been encouraging. Jewellery retail gross profit rose 15% in the three months to December. The pawnbroking book also saw further growth. That’s not surprising in the current climate.

There’s a dividend stream from this small-cap stock, too. Right now, Ramsdens is down to yield 4.4%. This payout is also likely to be easily covered by profit. So, there’s a high probability of it being paid. 

That said, no investment is a sure thing. Any chinks of light in the economy could see existing holders take profit and move on. 

Then again, the valuation of 10 times earnings isn’t exactly excessive. So, as a possible hedge against further economic pain, I reckon Ramsdens remains a tempting option.

Paul Summers has no position in Ramsdens Holdings.

UP Global Sourcing Holdings 

What it does: UP develops and sells branded kitchen and laundry products. Its brands include household names such as Salter, Beldray and Russell Hobbs. 

By Harshil Patel. UP Global Sourcing Holdings (LSE:UPGS) sells its homeware products via supermarkets, discount retailers and online. Its business is growing. Led by a competent management team, it has managed to grow profits steadily over several years. 

Looking forward, future growth is likely to come from overseas. International sales grew faster than UK sales last year. And there is potential to expand across Europe.  

Most of its sales come from a handful of its brands. As such, UP is likely to keep its focus on them. That should bring additional benefits by building scale and keeping development costs low. 

Bear in mind that it is currently reliant on its operations in China, and any post-Covid disruption could be an area to watch.  

That said, if I had some spare cash, I’d certainly buy this small-cap stock. It’s a profitable business with a resilient balance sheet. With a price to earnings ratio of just 10, and a dividend yield of 5%, the shares look cheap to me.  

Harshil Patel does not own shares in UP Global Sourcing Holdings. 

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

1. Hotel Chocolat

After its share price dropped by as much as 75% last year, Hotel Chocolat (LSE:HOTC) shares may seem like an odd pick, especially with a recession on the cards. However, I think there are key catalysts that bears have discounted.

The first is consumer behaviour during a recession. It’s interesting to note that chocolate sales have somewhat of an inverse relationship with consumer confidence. This can be attributed to the lipstick effect — the behaviour of indulging in small luxuries when there’s economic uncertainty. This was evident in its latest half-year update which saw UK sales increase by 7%.

Still, the company can’t shy away from its overall revenue dropping by 9% due to a weak international offering, as it’s always underperformed overseas. Even so, the penny stock is adamant on trying again in Japan. Only this time, it’s doing so with much less capital and more experience as it partners with local conglomerate Eat Creator.

More lucratively, the shares are currently trading at decent value with a great balance sheet boasting no debt. Its current valuation isn’t cheap by any means, but if the chocolatier achieves its goal of 20% EBITDA margin by FY25, starting a position now could present huge upside potential. After all, broker Leberium rates the stock a ‘buy’ with a price target of £3.00.

In fact, had I bought the stock when I first recommended it in late November, I would’ve been up by 35%. Thus, I don’t want to miss out this time, and I plan to start a small position soon.

2. Concurrent Technologies

Like many other tech-related companies in 2022, shares in Concurrent Technologies (LSE:CNC) suffered a downturn. Thankfully though, its drop wasn’t as drastic as many, due to its client base (aerospace, defence, and telecoms), which is more insulated from economic downturns.

In its latest trading update, the company mentioned that it expects its revenue for 2022 to beat consensus (£16m) by 10%, with pre-tax profits coming in as expected (£0.1m). And with the semiconductor industry seemingly at a bottom, a rebound could be on the cards, with Concurrent standing to benefit.

The firm ended last year with its highest ever order backlog as order intake rose by more than 25%. As such, the board is expecting to see significant revenue growth in 2023 as it plans to increase its production capacity.

Nonetheless, Concurrent’s investments in components, R&D, and improving its systems to mitigate supply shortages in 2022 saw its free cash flow tumble. As a result, its 3.4% dividend yield isn’t going to be paid out in the near future as the AIM stalwart looks to claw back its capital. But with a flawless balance sheet, it’s certainly got the right foundation to propel its free cash flow back up.

The penny stock isn’t exactly the cheapest based on its current multiples, which is something I’m cautious of. That being said, its long-term growth still entices me to start a small position given its upside potential.

The post Penny stocks: 2 AIM shares to turn my pennies into pounds appeared first on The Motley Fool UK.

David Barnes: Begbies Traynor

If you fear a second stock market crash or think the economy will struggle in the short term, I think a good hedge would be to invest in Begbies Traynor (LSE: BEG).

The insolvency and restructuring work specialist should see business demand surge as government support for companies is removed. The company is also a financial advisory and property services consultancy.

The firm has growing revenue and earnings per share, and uses acquisitions alongside organic growth to boost their financial strength.

Begbies Traynor trades at a fair price-to-earnings ratio of 16 and has a progressive 3% dividend that looks to be safely covered.

David Barnes has no position in Begbies Traynor.

Toby Aston: Anglo Pacific

Anglo Pacific Group (LSE:APF) is a global natural resources royalty and streaming company with a fantastic margins (52% profit last year). Its shares are down around 50% since last December, meaning the share price is a just 7 times earnings and at just 93% of book value. Management own around 7% of the shares which is encouraging.

It also pays a solid dividend yielding nearly 7%, which has doubled since 2016. This is all protected by a healthy dividend cover.  At 116p the shares are trading at low end of the 52 week range, despite analysts price target averaging 196p.

Toby Aston has no position in Anglo Pacific Group.

Royston Wild: Sylvania Platinum

Gold’s surge to record highs above $2,000 per ounce has dominated commodities-related chatter recently. But the yellow metal’s ascent due to rising safe-haven interest has dragged platinum group metals (or PGM) prices to significant highs as well.

Platinum has just struck multi-month peaks around $1,000 per ounce. And this has swept micro-cap stock Sylvania Platinum (LSE: SLP)’s share price to its highest since February. 

I’d buy the miner’s shares with the view that continued macroeconomic fears could drive their value even higher in the weeks and months to come. Sylvania’s low forward price-to-earnings (P/E) ratio of 11 times certainly leaves plenty of scope for additional share price gains.

Royston Wild does not own shares in Sylvania Platinum.

Tom Rodgers: Open Orphan

£96m market cap contract research firm Open Orphan (LSE: ORPH) is the world leader in testing vaccines and antivirals through its unique quarantine unit and on-site virology lab. 

Sales have been boosted by biotechs developing Covid-19 vaccines. But ORPH has large, long-term cash flow prospects far beyond coronavirus. 

A £4m contract with an unnamed global giant for a human challenge study into RSV is just the latest win. 2019 revenue was only £3.84m but that is expected to jump tenfold to £35m by 2021. 

Analysts think shares will more than double from today’s 14p price. 

I’m buying big. 

Tom Rodgers owns shares in Open Orphan.

Kirsteen Mackay: Trans-Siberian Gold 

Russian gold producer Trans-Siberian Gold (LSE:TSG) is a micro-cap stock that has caught my eye. With the price of gold ascending at an astounding rate, gold miners are reaping the benefits.  

Since the March market crash, the Trans-Siberian Gold share price has risen 165%. The £113m company has a price-to-earnings ratio of 14 and dividend yield close to 3%. It has maintained operations throughout the pandemic and delivered a positive set of results at the end of July. Its second quarter produced 46.9% higher average gold grades than its previous quarter. With the gold price continuing its ascent, I think the TSG share price will follow suit.  

Kirsteen does not own shares in Trans-Siberian Gold.

Matthew Dumigan: Jubilee Metals Group

Industry-leading metal recovery business Jubilee Metals Group (LSE: JLP) boasts an expanding multi-project portfolio with aims to increase both its geographical and commodity exposure. Operating in a rapidly expanding market, I think Jubilee is perfectly positioned to capitalise on increased demand for a reduction in the global footprint of mine tailings. 

Having become profitable for the first time this year, I’m impressed by the group’s recent financial performance. Moreover, as Jubilee continues to remain largely unnoticed by institutional investors (market cap: £115m), I think there’s a lucrative opportunity here for those willing to hold for the long term.

Matthew Dumigan has no position in Jubilee Metals Group.

Edward Sheldon: Keystone Law

My top micro-cap stock for August is Keystone Law (LSE: KEYS). It’s an innovative UK law firm that is disrupting the market by enabling lawyers to work from home or their own offices.

Keystone Law has grown at a rapid pace in recent years and I think it looks well-placed for growth in a post-Covid-19 world. I say this because its model is designed to service clients remotely.

KEYS isn’t the cheapest stock around. At the time of writing, its forward-looking P/E ratio using next year’s EPS forecast is about 36. However, I think this company deserves a premium valuation as it has a lot of potential for growth. 

Edward Sheldon owns shares in Keystone Law.

Rupert Hargreaves: Inspecs

Manufacturer of eyewear frames Inspecs (LSE: SPEC) is a unique business. The company is one of the few listed eyewear companies in the world, which gives it a defensive nature.

Indeed, the eyewear market is projected to expand at a compound annual rate of 8% for the next few years.  

Based on this growth, analysts reckon the company’s sales will double by 2021. This will leave the stock dealing at a forward P/E of 17.8.

The company’s double-digit profit margins and strong balance sheet also make it a prime dividend candidate.

Rupert Hargreaves does not own shares in Inspecs.

Rachael FitzGerald-Finch: Concurrent Technologies 

Shares in computer product manufacturer Concurrent Technologies (LSE: CNC) are growing nicely, like the company’s underlying financial fundamentals and investment metrics.

In fact, the share price is hovering around its 52-week high price point but is still trading on a price-to-earnings ratio of 22, below the industry average of 30. Given the competitive advantages of the firm, in the form of a growing an innovative product range, I am expecting further stock price growth.

I think Concurrent Technologies is a desirable micro-cap growth stock to hold as part of a balanced portfolio.

Rachael FitzGerald-Finch does not hold shares in Concurrent Technologies.

Anna Sokolidou: Ariana Resources

Ariana Resources (LSE:AAU), a small cap miner, explores silver and gold in Turkey.

Its shares have recently plunged a bit just like the two precious metals. In spite of the several months’ gold rally, the investors seem to be in a risk-on mode right now. However, I don’t really believe it will last for a long time. There are plenty of macroeconomic and geopolitical risks. So, in my view, gold and silver will rise in value pretty soon.

Although I consider small caps to be rather risky, their shares tend to surge more than their larger competitors’.   

Anna Sokolidou has no position in Ariana Resources.

Jonathan Smith: Mattioli Woods

Mattioli Woods (LSE: MTW) is a UK-based wealth manager. Financial performance through to the year end of May 31st was strong, with net inflows of around £200mn, despite the pandemic hampering the final few months. The firm has also been proactive with responding to the pandemic, taking on cost cutting measures with employee compensation, saving over £2.7mn in the process.

I’m also impressed with the drive and pro-activeness around growth aims. Only this month news broke of the successful acquisition of another wealth manager, Hurley Partners. This should aid long term growth via economies of scale.

Jonathan Smith does not own shares in Mattiolo Woods.

Kevin Godbold: Concurrent Technologies

Specialist designer and manufacturer of high-end, embedded computer boards for critical applications, Concurrent Technologies (LSE: CNC) had a ‘good’ coronavirus crisis. We last heard from the company in June. The directors said the order book is “strong” and the company maintained production through the lockdown.

The firm serves the military, aerospace, communications, industrial, transport and scientific sectors. It’s a good business, which shows in the robust multi-year record of rising cash flow and dividends suggesting the enterprise has defensive qualities. As we emerge from recession, I think the firm looks well placed to thrive. I’m backing the micro-cap stock for August and beyond.

Kevin Godbold owns shares in Concurrent Technologies.

G A Chester: Sylvania Platinum 

Sylvania Platinum (LSE: SLP) has built a record of strong operational performance in recent years. This is founded on its low-cost, low-risk extraction of platinum group metals (PGMs) from chrome tailings in the renowned PGM-rich Bushveld Igneous Complex in South Africa. 

The company’s strong operational performance has been matched by a sensible financial strategy. It’s debt-free. It’s strong cash flows fund capital expansion and process optimisation projects. And also support opportunistic share buybacks and shareholder dividends. 

Adding a single-digit earnings multiple to the strong management and focus on shareholder value makes Sylvania my top stock to buy right now. 

G A Chester has no position in Sylvania Platinum.

Roland Head: Somero Enterprises

I’ve been using this year’s market crash to buy shares in high-quality businesses trading at knockdown share prices. One micro-cap stock I think looks very attractive at the moment is Somero Enterprises (LSE: SOM).

This US business makes high-precision equipment for laying perfectly flat concrete floors, such as those required for ecommerce warehouses. The company went into the COVID-19 crash with a strong order book and reported net cash of $28m at the end of June.

Management say it’s too soon to give guidance on current market conditions. But Somero looks cheap to me on just eight times forecast earnings. I rate the shares as a buy.

Roland Head does not own shares in Somero Enterprises.

Andy Ross: Franchise Brands

Franchise Brands (LSE: FRAN) is a franchisor. Its franchises include consumer-facing ones such as ChipsAway and Ovenclean as well as business to business ones such as Metro Plumb and Willow Pumps.

I like that management are experienced operators. The executive chairman spent 21 years at Domino’s, which operates a franchise model. A number of the board and other senior management personnel also worked at Domino’s so know the industry well.

It’s an entrepreneurial company which has made acquisitions and retains talent within the business.

Franchisors can make good margins because it’s an asset light business model and I think that bodes well now and in the future.

Andy Ross does not own shares in Franchise Brands.

Paul Summers: Somero Enterprises

I think laser-guided equipment specialist Somero Enterprises (LSE: SOM) is a great buy for the long term. It’s the clear leader in a niche market and generates consistently high returns on capital employed.

Recent trading has been inevitably tough. However, Somero remains profitable and cash generative and would likely remain so even if revenues were to fall an additional 20%. It also has $28m in net cash to weather the coronavirus storm.

Those looking for a quick return probably won’t find it here. However, anyone intending to stick around for the next infrastructure boom could be richly rewarded. The shares look cheap at just 8 times forecast FY20 earnings.

Paul Summers owns shares in Somero Enterprises.

The post Top micro-cap stocks for August appeared first on The Motley Fool UK.

Institutional investors agree, as all three of these stocks are at least 50% owned by a mixture of active managers. This shows that professional investors are expecting these companies to rally over the coming years.

iomart Group

iomart Group (LSE: IOM) has two major divisions, Easyspace and Cloud Services. Easyspace provides hosting and domain services to small businesses. Meanwhile, Cloud Services targets larger companies and offers cloud computing services. Easyspace revenue has declined marginally this year, due to the nature of its clients. However, revenue in the larger Cloud Services division continues to grow organically.

It’s one of the UK tech stocks I’d buy because it has a diverse and reliable customer base and the business model ensures recurring revenue. The debt level has also declined in recent years and the business has more than enough liquidity to cover all short-term liabilities. This means that iomart should be able to weather the uncertainty of this year and continue to grow going forward.

Concurrent Technologies 

Concurrent Technologies (LSE: CNC) manufactures essential computer hardware for various industries. The company focuses on high-end products, especially boards. Its customers are based in less cyclical sectors, like defence and aerospace. This should ensure that its revenue remains relatively consistent despite the crisis. The share price has mostly recovered from the lows, but Concurrent is a very solid business, which I believe has a bright future and is still a bargain.

It is the second UK tech stock I’d buy today because it has no long-term debt and a comparatively high level of cash. It also has relatively high margins and should continue to see long-term organic growth. The stock has also performed excellently in the past few years and should continue on this trajectory.

SDL

SDL (LSE: SDL) produces language translation tech and has four major divisions. The specifics of each division are not necessary; all you need to know is that the company has suffered little from the current crisis but the stock has still lost value. The company had no hit to revenue in the first quarter and has implemented a cost-saving plan to accommodate any second-quarter loss.

SDL is a UK tech stock I’d buy because of its low level of debt, high cash balance, and solid business model. The company has very few clients in highly damaged industries like retail and travel and, as a result, should continue to grow. The share price is still 18% down from its highs earlier in the year, making this a great opportunity to buy a bargain UK tech stock.

All three of these UK tech stocks that I’d buy should weather the current economic problems and continue to grow. I believe that they could offer great returns for brave investors.

The post 3 bargain UK tech stocks I’d buy now to beat the market appeared first on The Motley Fool UK.

And as one of the UK’s leading healthcare companies, its dividend record should, in my opinion, remain unbroken for some time to come. Indeed, as the world’s population continues to expand and age, demand for the company’s wound care products, knee and hip implants should grow.

That being said, competition in the healthcare sector is only intensifying, which is going to make it harder for Smith & Nephew to maintain its competitive advantage going forward. So, if you are looking for a growth stock, I believe Concurrent Technologies (LSE: CNC) might be a better buy for your portfolio.

Looking to the future

Concurrent describes itself as a “world-leading specialist in the design and manufacture of high-end embedded computer boards for critical applications.” Management believes that the company’s edge and lies in its range of products, such as its new VR E7x/msd processor board, which allows for “improved processing capability, faster connectivity and enhanced digital graphics output.“

Concurrent’s revenue for the year to the end of December fell slightly to £16.2m from £16.4m, but thanks to an increase in the gross margin, profit before tax increased by 2.3% to £3m. 

As well as organic growth management is also on the lookout for acquisitions. In today’s trading update, Chairman Michael Collins noted that the “board continues to look for worldwide acquisition opportunities,” but also sees “opportunities to grow the business organically into new market areas without taking unacceptable risks.” With £8.4m of cash on the balance sheet at the end of the year, it certainly looks as if the company has plenty of firepower to pursue whichever path it chooses to take. 

And the robust balance sheet is also supporting dividend growth. Over the past five years, the payout has grown at a compound annual rate of 5.6% and today, the firm announced a 5% increase in its full-year dividend per share to 2.2p, giving a dividend yield of 2.7%. In comparison, Smith & Nephew’s dividend has contracted by 12% over the same period and the company has £1.3bn of net debt. 

In my view, Concurrent’s growth is only just beginning, and the City seems to agree.  Analysts have pencilled in earnings per share of 7.1p, that’s up nearly 86% from 2017’s figure, and gives a forward P/E of just 11.6. 

In control of its destiny

Concurrent’s growth, combined with the firm’s dividend potential, clearly shows why it is a better buy than Smith & Nephew. 

Trading at a forward P/E of just under 19, the market apparently thinks highly of Smith & Nephew, but the dear valuation leaves the share price vulnerable to any disappointments. Meanwhile, City analysts believe the company’s earnings will grow at a relatively modest rate of approximately 8% per annum for the next two years. 

What’s more, for a long time, the group’s shares have been propped up by takeover talk, although as of yet no concrete deal has been signed.

With this being the case, I’d pick Concurrent over Smith & Nephew no matter how distinguished its dividend record might be as, if a deal fails to emerge, the capital loss could significantly exceed many years of dividend income.

The post 1 Footsie dividend champion I’d dump to buy this monster growth stock appeared first on The Motley Fool UK.

Concurrent Technologies

£56m market cap Concurrent Technologies (LSE: CNC) designs electronic products for use in rugged environments. The company’s processor boards and software products are used by customers in the defence, security, aerospace, telecommunications and medical industries.

The firm has enjoyed strong growth in the last three years, with sales increasing from £11.9m to £16.4m, and earnings per share rising from 1.02p to 3.9p. Shareholders have been rewarded with an increased dividend each year, with last year’s payout of 2.1p equating to a dividend yield of 2.9% at the current share price.

Can this momentum continue? Let’s take a look at this morning’s half-year results for a clue.

For the six months to the end of June, Concurrent generated revenue of £7.8m, down from £9m last year. Profit before tax slipped to £1.4m from £1.5m, and earnings per share also declined, falling to 1.84p from 2.12p last year. While these numbers don’t make for great reading, the company did sound relatively upbeat in regard to future prospects. The group invested £1.2m in research and development during the period and it believes this investment will help “safeguard” revenues in future years. Chairman Michael Collins stated: “After a solid performance in the first-half of the year we have started the second-half with an expanding list of customers, many new opportunities and a strong balance sheet. The outlook for the future remains positive.”

The company raised its interim dividend by a generous 12.5%, which signals confidence from management, and a cash balance of £7.9m also gives the firm plenty of firepower going forward. With that in mind, while the market doesn’t like today’s numbers, I wouldn’t write off future growth prospects here just yet.

XLMedia

One small-cap dividend stock with a little more current momentum is online performance marketing company XLMedia (LSE: XLM). Indeed, interim results revealed a 33% surge in revenue to $67.9m, as well as a 23% increase in profit before tax.

The company, which uses proprietary tools and methodologies to drive traffic to its customers’ websites, has been an excellent performer for investors over the last two years, with its share price doubling in this time. The group also paid a well-covered dividend of 7.8 cents last year, a yield of 3.9% at the current exchange rate.

The stock trades on a forward P/E ratio of just 14, which appears to be a steal for a company that is forecast to generate revenue growth of 35% this year. However the low P/E is probably explained by the fact that XLMedia is an Israel-based company, and therefore investors are a little cautious of the stock in light of the performances of other similar international businesses (Globo, Telit Communications etc). As a result, XLMedia is perhaps best suited to more risk-tolerant investors.

The post Two small-cap stars offering growth and dividends appeared first on The Motley Fool UK.