5 Jul

Here are two UK small-cap stocks I’d buy right now

first_img Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! James J. McCombie | Friday, 9th October, 2020 | More on: SCE STX 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. Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before! The high-calibre small-cap stock flying under the City’s radar James J. McCombie owns shares of Surface Transforms. The Motley Fool UK has no position in any of the shares mentioned. 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. Looking for other small-cap stocks to consider adding to your portfolio? Then you might want to read about… Image source: Getty Images Here are two UK small-cap stocks I’d buy right now Our 6 ‘Best Buys Now’ Shares If you are looking for UK small-cap shares to buy, I think Surface Transforms (LSE:SCE) and Shield Therapeutics (LSE:STX) look like good picks for a portfolio. I think both have the potential to deliver the kind of returns small-cap stocks are known for, but they also look less risky now due to significant and recent business developments. A breakout UK small-cap stockSurface Transforms makes carbon-ceramic brakes. Its proprietary method produces brake discs that are more durable and conduct heat better than its competitors. Surface’s main competitor owns almost all of the market, but the owners of BMW own most of it. Surface presents a compelling alternative for carmakers concerned about this BMW connection. 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…After many years of trying to crack the market, orders are starting to grow. Surface won several new contracts in 2020. One of them – to be a sole supplier to a global customer – is a huge deal. To be a sole supplier, the customer must have complete confidence in the product and its delivery. Others will take note, and this could be the key that unlocks a chunk of market share in the future.These new orders should push the company into profitability by 2021, and profits should continue to grow in 2022 and onwards. And I think there is more to come. The carbon-ceramic brakes market is worth around £200m and is growing. A 10% market share equates to revenues of over £20m per year – a significant improvement on the £1m in revenue reported in 2019. I think a 10% market share is achievable. So if you are looking to buy shares in a UK small-cap company, I think you should consider Surface.Stock therapyShield Therapeutics is a pharmaceutical company. Its lead product, Feraccru/Accrufer, treats iron deficiency anaemia. Regulators have approved Feraccru/Accrufer and it is now commercially available. Getting past the approval stage and onto marketing and selling a drug is a significant milestone and reduces the risk of failure. Now the company needs to focus on increasing sales volume.Shield finds marketing and distribution partners for the markets it wants to enter. The partners pay upfront and milestone payments and royalties on sales. Shield’s European partner sold more of the product in the first half of 2020 than in the whole of 2019. A deal with a distributor covering China, Hong Kong, Macau and Taiwan has been agreed this year and sales could commence as early as 2023.Finding a US partner would be a game-changer for Shield, and could happen before 2020 is out. The deal with the Asian distributor is worth around £35m in upfront and milestone payments, and 10%–15% of net sales for at least 10 years. I would expect the US deal to be more lucrative. Combining European, Asian and US upfront payments and royalties on sales is expected to tip Shield into positive cash flow and consistent profitability from 2022 onwards.Owning shares in Shield looks a lot less risky now. Getting to the point of actually making sales of a drug is a huge milestone. The next step is to scale up in existing markets and break into new ones. I think Shield is a UK small-cap stock to buy right now. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. See all posts by James J. McCombielast_img

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