2 small caps to take a look at on the London Inventory Trade

The London Inventory Trade is dwelling to many small-cap shares buying and selling at low cost or cheap valuations. In a sea of speculative AI and quantum computing shares overseas, these homegrown corporations provide a grounded various, for my part.

Listed here are two AIM-listed shares that I believe are set as much as do effectively over the following few years.

Ramsdens

First up, we have now Ramsdens (LSE:RFX). The £113m-cap firm does pawnbroking, international foreign money change, and the shopping for and promoting of jewelry each on-line and thru 169 excessive avenue branches.  

Ramsdens’ valuable metals section has been on fireplace recently because of the surging gold value. Within the 12 months to 30 September, gross revenue elevated 50% 12 months on 12 months as its weight of gold bought jumped roughly 15%. 

Elsewhere, the pawnbroking mortgage guide grew 8% to £11.5m, as final 12 months’s launch of a brand new devoted pawnbroking web site attracted new prospects. For the total 12 months, administration expects pre-tax revenue to be barely forward of market expectations for £15.4m (up at the very least 35%).

Wanting forward, Ramsdens is bullish on its prospects and expects to open between eight and 12 new shops per 12 months. This enlargement provides threat, in fact, as there’s no assure that the brand new places will do effectively. In spite of everything, the British excessive avenue is in long-term decline, and the agency not too long ago selected to merge two of its central Glasgow shops.

Nonetheless, Ramsdens is supplementing its bodily presence with a rising on-line operation. Furthermore, gold is tipped to proceed rising as central banks purchase document quantities of the steel to diversify away from the US greenback and geopolitical threat. So I believe the agency is well-placed to hold on rising and growing its earnings.

The inventory is up 76% prior to now 12 months. But the valuation doesn’t look stretched, with the ahead price-to-earnings (P/E) ratio of simply 9.8. There’s additionally a helpful 4.1% forecast dividend yield on provide.

While we have now benefited from the sustained excessive gold value inside our buy of valuable metals section, we’ve additionally continued to make good progress throughout our different earnings streams. Particularly, our continued success in jewelry retail highlights a rising consciousness of our worth for cash proposition.

Ramsdens CEO Peter Kenyon

SpaceX-fuelled development

The second inventory is Filtronic (LSE:FTC). This £287m firm designs and manufactures specialist merchandise for the aerospace, defence, area, and telecoms infrastructure markets.

The inventory is up almost 800% over the previous two years, and shareholders can thank Elon Musk’s rocket and satellite tv for pc agency SpaceX. That’s as a result of Filtronic has a profitable deal in place to produce parts for the area exploration large’s Starlink satellite tv for pc constellation. In August, it signed a document $62.5m (£47m) cope with SpaceX.

Nonetheless, the share value has not too long ago paused for breath after its huge rally. In reality, it’s down 24% since June, placing the inventory on a extra cheap ahead P/E ratio of 36 (for FY27, which begins in June).

That a number of would possibly come throughout as excessive, and there’s admittedly a variety of buyer focus threat right here. SpaceX accounted for 83% of FY25 income.

Taking a five-year view, nonetheless, I’m bullish on the agency’s prospects. Not solely is it prone to choose up additional provide contracts for SpaceX’s rising Starlink constellation, however I believe Filtronic ought to have engaging alternatives in defence as Europe rushes to construct up its navy capabilities.