Best small cap stocks to watch in 2025

Small cap stocks in brief

In the UK, small cap stocks are considered to be companies which trade on the FTSE Small Caps index — those businesses that are not large enough to be included with in the FTSE 350. They tend to sport a market capitalisation somewhere in the region of hundreds of millions to perhaps a few billion pounds.

Investors often view small caps as having stronger growth potential than the more mature companies quoted on the FTSE 100 or FTSE 250, but with correspondingly magnified risk.

Importantly, this can mean that their stock market performance can be more unpredictable. For context, the FTSE Small Caps index has risen by circa 12% over the past five years, a positive result even if it has significantly underperformed larger indices such as the S&P 500.

But this broader performance hides the reality that in those five years, some individual companies have enjoyed exponential growth while others have flatlined or suffered sharp corrections.

Small cap companies often exist in special niches or work within innovative emerging industries. They are more susceptible to economic downturns, often have lower liquidity, and sometimes have difficulty accessing growth capital in higher rate environments.

Small caps also tend to enjoy less or even no analyst coverage — and as a result can be poorly valued by the market. This is a double-edged sword for growth investors looking for a long-term investment as you can gain an information advantage through your own research.

But perhaps the common theme for all small caps is that a long-term perspective is required, as they need time to fulfil their potential and are subject to market sentiment in the interim.

How to invest in small caps with us

1. Learn more about small cap stocks
2. Download the IG Invest app or open a share dealing account online
3. Search for small cap stocks on our app or web platform
4. Choose how many shares you’d like to buy
5. Place your deal and monitor your investment

Investors look to grow their capital through share price returns and dividends - if paid.

But the value of investments can fall as well as rise, past performance is no indicator of future returns, and you could get back less than your original investment.

We also offer many small cap-focused ETFs, including the popular iShares MSCI UK Small Cap UCITS ETF, which aims to provide investors with exposure to a diversified portfolio of UK small-cap companies, sporting a reasonable expense fee of 0.58%.

Top small caps to watch

The following 10 shares have been selected for their popularity and brand name recognition among UK retail investors.

1. Shoe Zone (LON: SHOE)
2. Card Factory (LON: CARD)
3. Marston’s (LON: MARS)
4. Gym Group (LON: GYM)
5. Evoke (LON: EVOK)
6. Metro Bank (LON: MTRO)
7. Hays PLC (LON: HAS)
8. Yu Group (LON: YU)
9. Genus PLC (LON: GNS)
10. Mears (LON: MER)

Shoe Zone (LON: SHOE)

Shoe Zone is a well-known budget footwear retailer, which operates nearly 300 shops across the UK — and a fast-growing online platform offering free next-day delivery and returns. It sells circa 14 million pairs of shoes annually, with an average retail price of just £13.50. These low prices are possible because the company sources directly from factories — including Skechers and Kickers brands.

In its fiscal 2024, Shoe Zone saw revenues dip by 2.7% year-over-year to £161.3 million, and generated an adjusted profit before tax of circa £9.5 million, down from £16.5 million in 2023 — with the fall blamed on unseasonable weather, weak consumer confidence and extra wage and tax costs.

Card Factory (LON: CARD)

Card Factory is a leading retailer of greeting cards and related gifting products, offering a wide range party supplies. If you’ve ever organised a child’s birthday party, you will know the brand.

The company focuses on value and convenience, designing and manufactures the majority of its products in-house, allowing for unique offerings and ultralow pricing. It has also expanded its online presence to cater to the growing e-commerce demand.

In its fiscal 2024, Card Factory saw revenue rise from £364.4 million in the previous year to £463.4 million — while profit before tax rocketed from £11.1 million in 2023 to £52.4 million.

Marston’s (LON: MARS)

Marston's is a popular British pub and hotel chain company which is perhaps most well-known for its brewing history, including its six breweries producing over 60 of the UK’s favourite ales. The business sports 1,339 sites covering traditional locals through to family pub restaurants and town centre bars.

After selling off its 40% stake in the Carlsberg Marston’s Brewing Company joint venture last July, the company saw a pre-tax profit in its fiscal year of £14.4 million, compared to a £30.6 million loss a year earlier. Revenue also rose by 3% year-over-year to £898.6 million.

Gym Group (LON: GYM)

The Gym Group is a UK-based operator of 245 low-cost, no-contract gyms, which provide 24/7 access to members. Like its rivals, the twin focus on affordability and flexibility has proven attractive to customers — as has the company’s app and virtual class offering.

In full-year 2024, revenue came in at of £178.6 million, up from £153.1 million in the previous year — and the company swung from a loss of £7.1 million to a profit before tax of £12.5 million.

Evoke (LON: EVOK)

Evoke, formerly 888 Holdings, is a global online gaming provider, operating multiple brands in the casino, poker, and sports betting sectors. 888 Holdings was one of the first companies to receive a license in the regulated US online gaming market, and brands including William Hill and 888casino enjoy strong name recognition.

In a recent trading update for Q4 2024, Evoke reported revenue growth of between 12% and 13% year-over-year, with adjusted EBITDA expected to be at the high end of the previously communicated guidance range of £300 million to £310 million for the full year.

Metro Bank (LON: MTRO)

Metro Bank is a UK retail and commercial bank operating in the UK, differentiated from the rest by its extended opening hours and widespread branches — though this is currently coming under threat with opening hours scaled back. Metro Bank was the first new high street bank to IPO in the UK in over 150 years when it launched in 2016, and currently has around 70 branches.

In H1 2024 results, underling loss before tax narrowed from £33 million in the prior half to £26.8 million, primarily driven by a lower net interest margin of 1.64%.

Hays PLC (LON: HAS)

Hays PLC is a global professional recruiting group, specialising in placing professional candidates across a wide range of industries. Operating in 33 countries, Hays offers recruitment services for permanent, temporary, and contract roles — with around 1,000 people placed in new jobs by the company every working day. The business also provides market insights and salary guides to support employers, job seekers and the media.

In its most recent quarter, Hays saw group net fees decrease by 12% year-on-year on a like-for-like basis, perhaps due to the increased costs of hiring since the budget.

Yu Group (LON:YU)

Yu Group is an independent supplier of gas, electricity, and water to the UK business sector. The company is well-known for its simple contracts and exceptional customer service — and has invested heavily in technology, including its customer portal, to streamline account management for businesses. It focuses on delivering sustainable energy solutions for SMEs across the UK.

In H1 2024, revenue rose by some 60% year-over-year to £312.7 million, driving profit before tax up by a whopping 122% to £19.8 million.

Genus PLC (LON: GNS)

Genus PLC is a global leader in animal genetics, specialising in the improvement of livestock breeding to enhance food production efficiency. The company’s cutting-edge work in the gene editing and genomics of pigs and cattle is genuinely world-leading, addressing major challenges including disease resistance in livestock.

In 2024 full-year results, group revenue fell by 3% year-over-year to £668.8 million, though statutory profit before tax decreased by a significant 86% to £39.4 million arguably due to decreased demand from China.

Mears Group (LON:MER)

Mears Group specialises in housing solutions and care services, in partnership with local authorities and housing associations. It provides property maintenance, housing management, and care services to improve quality of life for communities — managing over 17,000 homes across the UK and care services to approximately 20,000 people every day.

In H1 2024 results, revenues rose by 10% year-on-year to £580 million, while profit before tax increased by 44% to £30.5 million, driven by grant funding, larger contracts, and strong management.

Small caps summed up

• UK small cap stocks are considered to be companies which trade on the FTSE Small Caps index
• Small caps often exist in special niches or are working within innovative emerging industries
• Investors often view small caps as having stronger growth potential than the more mature companies quoted on the FTSE 100 or FTSE 250, but with correspondingly magnified risk
• The common theme for all small caps is that a long-term perspective is required