Edward Sheldon: Calnex Solutions

My top micro-cap stock is Calnex Solutions (LSE: CLX). It’s an under-the-radar technology company that specialises in testing and measurement services for telecommunication networks.

Calnex is benefitting from the rollout of 5G networks and the widespread adoption of cloud computing. The company’s H1 results for the six months to 30 September 2020, for example, showed revenue growth of 37%. Meanwhile, the company recently advised that its revenue for FY2021 would be ahead of market expectations. It also said that it is well positioned to deliver its historical growth rates over the long term.

Like any micro-cap, this stock could be volatile. However, overall, the investment case looks attractive, in my view.

Edward Sheldon owns shares in Calnex Solutions.

Christopher Ruane: Foxtons

Estate agent Foxtons (LSE: FOXT) offers exposure to any rebound in the London property market.

The pandemic had an impact and revenue fell 12% last year. However, the pre-tax loss was sharply reduced from the prior year despite the difficult market. The company moved back into profitability in the second half of last year and says financial performance has continued to improve. Revenue in January and February was well ahead of the prior two years.

Its well-known brand is an asset in the crowded London market. I would consider buying Foxtons at its current price.

Christopher Ruane does not own shares in Foxtons.

Jonathan Smith: McBride 

McBride (LSE: MCB) is a UK-based manufacturing firm that offers private label services as well as producing some own-label products. This is mostly in the household cleaning area. 

The share price is up over 40% over the past year, thanks to increased demand from lockdown for many lines. Fiscal half-year operating profit (H2 of 2020) was up 83.6%, which impressed me.

Going forward, I think the business is well diversified with operations in 12 countries. It also appeals to ESG investors, given that 99% of packaging produced is recyclable.

Jonathan Smith has no position in McBride.

Royston Wild: Michelmersh Brick Holdings 

Continued strength in the UK housebuilding industry leads me to believe that Michelmersh Brick Holdings (LSE: MBH) will release encouraging trading news later this month. The AIM-quoted company is due to unveil full year results on Tuesday, March 30. 

Michelmersh certainly impressed when it last updated the market in November. Then it said that production capacity had returned to pre-coronavirus levels and that trading had remained “resilient” since June. Consequently it said that underlying revenue and profit would beat market estimates for 2020.

Today Michelmersh trades on a price-to-earnings growth (PEG) ratio of just 0.9 for 2021. This suggests that the company is being undervalued by market makers. And it’s a reading so low that I think another positive update in the coming days could prompt a sharp re-rating of the brickmaker’s shares.

Royston Wild does not own shares in Michelmersh Brick Holdings.

Conor Coyle: MacFarlane Group 

MacFarlane Group (LSE:MACF) is a micro-cap stock I think could be set for significant long-term growth. The company designs, manufactures and delivers packaging to businesses throughout the UK. Demand for packaging products has shot up as the number of online deliveries has increased due to the pandemic.

The Glasgow-based company is a well-established business and has continued to post strong profits despite economic uncertainty in the last year. I think its online retail profits will continue to grow, and with key customers in the aerospace industry bouncing back this year I see further growth ahead.

Conor Coyle does not own shares in MacFarlane Group.

Roland Head: UP Global Sourcing

One small-cap stock whose prospects excite me is UP Global Sourcing (LSE: UPGS).

This firm owns and licences a range of consumer goods brands, such as Russell Hobbs, Salter, Beldray and Constellation. Demand for kitchen, laundry and cleaning products has been strong during lockdown, with sales up 11% during the six months to 31 January.

There’s obviously a risk that demand could slow as the UK exits lockdown. But the firm recently upgraded its sales guidance for the year ahead, reporting “strong momentum” in new orders.

UPGS shares are up by 50% from their pre-pandemic levels. I believe they have further to go.

Roland Head owns shares of UP Global Sourcing.

Tom Rodgers: Alumasc

Sustainable building materials producer Alumasc (LSE:ALU) is one of my favourite kinds of stocks. The kind that no-one’s heard of until suddenly everyone’s heard of it.

Established in 1945, the AIM-listed firm’s shares are trading at a three-year high, and it will pay a hefty 5.4% dividend yield next year. It boasts a forward P/E ratio of just 7.8 and a forward PEG of 0.4, making it seriously undervalued in my book. The fact that the company’s £61.7m market cap is well below its annual £80.4m revenue does it no harm at all, either.

Tom Rodgers has no position in Alumasc.

Jabran Khan: Yourgene Health

Yourgene Health (LSE:YGEN) is a genetic testing firm that produces non-invasive products for male fertility and prenatal screening for cystic fibrosis and more. Yourgene joined the Covid-19 products market with a testing solution.

It has established a presence in the UK, Europe, the Middle East, Africa and Asia. YourGene relies on commercial partnerships with larger firms, which I see as a positive.

Trading in the past year has shown progression for the £117m market-cap business. FY results are due soon and are expected to be positive. At just 16p per share, Yourgene could be a micro-cap gem for the long term in my portfolio. 

Jabran Khan has no position in any of the shares mentioned.

Rupert Hargreaves: Belvoir Group

Property franchise group Belvoir (LSE: BLV) offers a range of services from lettings to sales and financial services.

Growth since 2014 has been outstanding. Net income has grown at a compound annual rate of 28%. And Belvoir is expecting to report revenue growth of 12% for 2020.

Despite its historical growth, Belvoir has its risks. If the UK property market should start to struggle, the firm’s income may begin to shrink. Still, I would buy this micro-cap stock considering its potential to grab market share over the next few years.

Rupert Hargreaves does not own shares in Belvoir.

G A Chester: Trans-Siberian Gold 

Trans-Siberian Gold (LSE: TSG) is a low-cost, high-grade producer from its Asacha mine in Far East Russia. It also has exploration and development assets in the region. 

Its strong balance sheet and cash generation enable it to invest for growth, and reward shareholders with dividends and share buybacks. It aims to pay a sustainable base dividend through the commodities cycle, and – as currently – higher payouts when cash flows permit. The running yield is near 8% right now. 

Operational risk is currently concentrated due to TSG’s single producing mine, but it does have ambitions to become a mid-tier, multi-asset gold producer. 

G A Chester has no position in Trans-Siberian Gold.

Andy Ross: Totally 

Shares in healthcare services provider Totally (LSE: TLY) have more or less trebled over the last 12 months. In my opinion, it’s a strong micro-cap business with long-term potential and room for more share price growth.  

I believe that the shares should continue to do well because the group has launched an insourcing business, has a strong relationship with the NHS and has made selective acquisitions that will boost earnings growth. It’s addressing a huge potential market across the UK & Ireland, and in time potentially further afield.  

The group is likely to become profitable shortly, has been growing revenues rapidly year-on-year and already pays a dividend, which is a bonus.  

Andy Ross does not own shares in Totally.

Nadia Yaqub: Scancell

I reckon things look promising for Scancell (LSE: SCLP). It’s an immuno-oncology company. That’s a fancy way of saying it develops treatments that stimulate the body’s own immune system to treat or prevent cancer. Some of Scancell’s products are being tested in clinical trials.

But I reckon the real gem is its second generation Covid-19 vaccine. According to Scancell, its version of the jab could develop long-term immunity to the virus and offer better protection against the variants. It’s still early days, but I think Scancell has bags of potential.

Nadia Yaqub does not own shares in Scancell.

Kevin Godbold: Ramsdens Holdings

Ramsdens Holdings (LSE: RFX) operates from around 157 stores in the UK, offering pawnbroking, financial, retail and foreign currency exchange services. It’s a decent business and the firm sports some impressive quality indicators. City analysts expect earnings to bounce-back by almost 60% in the trading year to September 2022.

With the share price near 172p, the forward-looking earnings multiple is just above 11. And the anticipated dividend yield is around 3.5%. I like the net cash position on the balance sheets and the positive outlook for growth in earnings. That’s why I’d buy this micro-cap stock to hold for March and beyond.

Kevin Godbold does not own shares in Ramsdens Holdings.

Kirsteen Mackay: Trans-Siberian Gold

My top micro-cap stock for March is Trans-Siberian Gold (LSE:TSG). I think gold stocks can help achieve a diversified portfolio. With low interest rates likely to stay low for some time, this provides a favourable environment for gold. And hints of inflation on the rise make me think gold remains a good hedge.

Trans-Siberian Gold operates in Russia and recently reported a significant upgrade to the resources at its flagship gold mine following a successful drilling campaign. Its market cap is £81m and it has a price-to-earnings ratio of 14. The company pays a 7% dividend yield. 

Kirsteen Mackay does not own shares in Trans-Siberian Gold.

Zaven Boyrazian: Tracsis

The UK government recently unveiled its roadmap to ease lockdown restrictions within the UK. As more people head back to the office or go on a long-overdue holiday, the demand for Tracsis’ (LSE:TRCS) services is rising.

Tracsis engages in traffic data analysis, along with railway fault detection systems. Using its software solutions, optimised routes for vehicles can be plotted within pedestrian-rich areas.

The business is far from risk-free. Covid-19 led to a significant rise in operational expenses, and there are numerous competitors to outperform.

But despite these threats, I think the stock is on track to continue delivering long-term growth for my portfolio.

Zaven Boyrazian does not own shares in Tracsis.

Manika Premsingh: McBride

The private label household and personal-care goods’ manufacturer McBride (LSE: MCB) has made share price gains since late 2020. However, its price is still way below its pre-pandemic levels.

I could see it staying there if McBride was Covid-19 hit. But the opposite is the case here.

It has actually seen a rise in revenues for the six months ending December 31, 2020 as the pandemic drove up cleaning products’ demand. It is also profitable and expected its full-year pre-tax profits to be 10% ahead of the consensus estimate at the time it made the statement.

McBride’s profits have fluctuated in past years and its debt is growing. But on balance, I am optimistic about its prospects, making it my top micro-cap stock for the near term.

Manika Premsingh has no position in McBride.

Paul Summers: Ramsdens Holdings

My top micro-cap pick for March is Ramsdens Holdings (LSE: RFX).

Investing in a pawnbroker may not be everyone’s cup of tea but Ramsdens is also a jewellery retailer, precious metals buyer/seller and foreign currency specialist. Although there can be no guarantees, the last of these might recover strongly once UK holidaymakers are allowed to travel again. In addition to this earnings diversity, the company’s finances look strong and it makes great returns on invested capital. 

Shares remain far below the highs hit in early 2020. With lockdown restrictions set to end, I think we might see this gap close over the rest of the year. 

Paul Summers owns shares in Ramsdens Holdings.

Yourgene Health Plc (LSE:YGEN) is on my ‘ones to watch list’ list. It’s a genetic testing firm that produces non-invasive products for male fertility and prenatal screening for cystic fibrosis and other genetic disorders. In addition, YGEN is planning to expand into genetic testing for cancer detection and prevention. YGEN has also joined the Covid-19-related products market with its own testing solution.

FTSE AIM opportunity

YGEN has been listed on the FTSE AIM for six years and has been steadily increasing its footprint. It has established a commercial presence in the UK, Europe, the Middle East, Africa and Asia.

YGEN does relies on commercial partnerships with bigger DNA testing firms out there but I do not see this as a drawback. Sometimes smaller companies will bring fresh ideas and proprietary knowledge to the table. Larger firms then utilise their own infrastructure and reach and both parties benefit.

I always take notice of companies who undergo acquisitions to grow, especially into new territories such as the US. Yourgene acquired Elucigene in April 2019 and launched its first oncology product. I believe this is a statement of ambition and will help it to reach new heights.

As I write this, shares in YGEN can be picked up for a very modest 17p per share. Just before the market crash that rocked the whole FTSE index, shares were trading very close to a similar level of 17p. The crash did cause a small dip in price and shares could be purchased at just 10p. Even at current prices, I consider this a bargain with very little risk involved.

Recent performance

On Monday, YGEN released a half-year trading update for the six months ending 30 September 2020. There were several positive takeaways from this report. Revenue increased 5% compared to the same period last year. The UK and Europe each saw a healthy increase of 40% and 80% respectively. This helped offset a reduction in revenue for the rest of the world. This was to be expected as many firms across the FTSE reported difficulties due to the market crash. YGEN also saw revenues for its Covid-19 testing solution begin to increase and the forecast for the second half of the year is positive.

In addition to the financials, YGEN raised £15m of funds to complete a new acquisition in the form of Canadian firm Coastal Genomics, which I believe will further its reach in the North American market.

My verdict

I really like the look of Yourgene even though it is just a £128m market cap business. It is making good headway with its footprint and is attempting to gain a share of a multi-billion pound industry. It is regularly acquiring smaller firms and amalgamating them into its operation to enhance its offering. Also, YGEN is showing growth in respect of revenue and has joined the potentially lucrative Covid-19 product market.

At its current price, I believe YGEN represents a bargain, albeit with a small amount of risk involved. I like picking up FTSE small-caps when they have potential such as this, as it helps diversify my portfolio.

Caveat emptor, of course. With fewer daily trades in AIM-listed companies than on the FTSE 100 or FTSE 250, it can be more difficult to sell up if you want out in a hurry.

But having picked apart their finances I think these smaller UK-listed companies will be among the best performers of 2020.

Shearwater Group

£53m market cap Shearwater Group (LSE:SWG) is an AIM-listed cybersecurity, infosec, and IT risk management business with 400 customers across FTSE 350 firms, government departments, and US Fortune 500 companies.

One of the few British independent businesses in the cybersecurity field, Shearwater has been plugging away nicely in recent years, buying up profitable companies to add to their group and cross-selling products between them to generate better revenue, which I like.

The board, now led by CEO Phil Higgins, has focused on a “buy, focus, grow” strategy, adding penetration and threat testing firm Pentest to its stable in April 2019 for £7.4m.

Behind the scenes there is a lot of product development going on, such as a scanning-as-a-service product that uses machine learning to audit sensitive data on external drives, in cloud applications like Office 365, and in cloud storage, such as Google Drive.

The second half of 2019 represented the maiden profit period for SWG, with revenue swinging up 11% to £16.3m, earnings of £1m and adjusted earnings per share of 2.23p.

News has gone a little quiet in recent weeks, so I’d expect the next major update to send the share price soaring.

YourGene Health

Manchester genetic testing firm YourGene Health (LSE:YGEN) develops non-invasive products for male fertility, and pre-natal screening for cystic fibrosis and other genetic disorders.

What caught my eye about the £88.2m market cap business is their planned expansion to extend genetic testing into cancer detection and prevention. Acquiring Elucigene in April 2019 means the company has been able to expand into the US market and launch its first oncology product.

Like Shearwater, YGEN has just posted its first positive earnings. Revenue is growing strongly, up from £0.1m to £8.8m over the last five years, and directors in the company continue to buy more stock to raise their personal stakes, which bodes well.

CEO Lyn Rees highlighted the firm’s strong prospects in recent half year results to 30 September 2019. Revenue was up 97% with excellent organic growth of 56%, gross profits 141% higher, and net cash “significantly improved” to £3.6m compared to net debt of £12.8m over the previous half.

I usually seek positive language in regulatory updates, backed by strong financial fundamentals, and YGEN has this in spades. “I remain convinced we have a very significant opportunity ahead of us,” Rees noted, adding, “we are confident in our outlook for the year ahead and very excited about the prospects for further growth over the following years“.