Best Small Cap Stocks this January 2026 in the UK

The stock offers a dividend yield of 6.36%, which may appeal to income-focused investors despite a challenging performance, as evidenced by a 1-year return of -7.12% and a steep 5-year decline of -32.05%. Additionally, with an analyst rating of C, caution is advised for those considering an investment in this asset.

PureTech Health stands out in the biotech sector, boasting a portfolio value that significantly surpasses its market capitalization, indicating substantial growth potential. Although the firm recorded a modest one-year return of 3.59%, it has faced challenges over the past five years with a decline of 67.78%. Analysts have recognized its promise, with Piper Sandler maintaining an Overweight rating and SVB Leerink consistently rating it as Outperform, reinforcing the belief in its upside potential.

AFC Energy, a small-cap energy company, is projected to more than double in value, despite facing some challenges with a -84.50% return over the past five years. Recently, the company achieved a strong one-year return of 34.78%, although its profitability remains a concern with a net profit margin of -533.07%. Analysts have given it a rating of C, indicating cautious optimism amid its growth potential.

AFC Energy has not been profitable, with a trailing twelve months (TTM) net profit margin of -533.07%.

Impax Asset Management Group is a top-rated asset management firm recognized for its growth potential. With a substantial dividend yield of 7.11%, it could be an attractive option for investors seeking reliable income, despite recent performance showing a 1-year return of -20.19% and a significant 5-year return of -80.84%. Analysts are optimistic, giving it an A+ rating, indicating strong confidence in its future prospects.

IperionX Ltd (IPX) has a consensus rating of Strong Buy from 2 analysts, with 100% recommending a Strong Buy.

Immupharma's stock has a volatility of 9.67% and a beta coefficient of 0.47.

MJ Gleeson, a housebuilder and support services company, is currently facing challenges reflected in its performance, with a 1-year return of -16.68% and a significant 5-year return of -45.00%. Despite these setbacks, it offers a dividend yield of approximately 2.75%, making it a potential option for investors seeking income amid a tough market landscape. The stock has earned an A- rating from analysts, though caution is advised given the broader concerns affecting the sector.

GLE stock has a consensus rating of Sell, with an average score of 1.00 based on one sell rating and no buy or hold ratings.

Leggett & Platt is restructuring due to declining competitiveness and stagnant revenues, leading to divestments and a significant dividend cut.

Analysts have set a target price for LSEG between 11,000.00 GBp and 14,550.00 GBp, with an average target of 12,400.59 GBp, indicating a potential upside of 35.02%.

With a robust dividend yield of 8.25%, Speedy Hire provides an attractive option for income-focused investors, even as it grapples with a challenging performance, showing a 1-year return of -12.07% and a significant decline of -63.57% over the past five years. The consensus among analysts is notably positive, with a strong "buy" rating from five experts, highlighting the potential for recovery, as they project a median price target of 50.00. Such insights suggest that while the short-term outlook may be rocky, the long-term prospects could offer a compelling investment opportunity for those willing to endure volatility.

Speedy Hire has a median price target of 50.00 from analysts, indicating a potential 100.80% increase from its current price of 24.90.

Analysts rate Speedy Hire as a 'Strong Buy', with all 5 analysts recommending to buy the stock.

AB Dynamics stands out as a promising small-cap stock, earning recognition among top picks for 2026 with a solid analyst rating of A-. Despite facing a challenging year with a 30.39% decline in returns and a five-year return of -43.24%, this stock presents a potential opportunity, indicated by buy signals from both short and long-term Moving Averages.

AB Dynamics plc is currently a buy, as both short and long-term Moving Averages indicate positive signals.

AB Dynamics is expected to grow earnings at 12.5% per year, which is higher than the savings rate but slower than the UK market average of 14%.

Restore, a support services company, stands out among analysts' top picks due to its solid performance and strong fundamentals. With a dividend yield of 2.26% and a 1-year return of 25.68%, it demonstrates potential for both income and appreciation, making it an appealing choice for investors looking for reliable income from financially healthy companies. While it holds a B- analyst rating, the stock is currently viewed as a Hold by the majority of analysts, suggesting cautious optimism for future growth.

RH (RH) has a consensus rating of Hold from 16 analysts, with 13% recommending Strong Buy, 38% Buy, 38% Hold, 6% Sell, and 6% Strong Sell.

The average price target for Rolls-Royce Holdings PLC (RR.L) over the next 12 months is 1,252.92 GBP, indicating a potential downside of 1.58%.

RTX Corporation shares have risen by $2.09, or 1.05%, closing at $201.92.

Nvidia is expected to show significant growth in 2026, along with Nebius Group and The Trade Desk, which is projected to rebound.

Next 15 Group, a marketing and communications services firm, is currently marked with a C- rating from analysts, reflecting some concerns in its performance. With a dividend yield of 5.71%, it offers reliable income despite a challenging backdrop, having returned -18.88% over the past year and a striking -51.71% over the past five years. Investors may find this stock appealing for its potential lower risk, indicated by a score of 54, which is slightly above its historical median.

NEXCF has a risk score of 54, indicating lower risk than normal, as it is trading in the 50-60% percentile range compared to its historical scores.

FNF has a Buy consensus rating from three analysts as of January 19, 2026.

Ganfeng Lithium has a consensus rating of 'Buy' based on insights from 19 analysts.

Carnival's earnings per share are expected to grow at a compound annual rate of 12% from fiscal 2025 to 2028, which may help the stock outperform the market over the next five years.

Luceco PLC offers a dividend yield of 4.02%, which may attract income-focused investors despite its mixed performance history. Over the past year, the stock has returned 6.71%, but it has significantly underperformed with a 50.52% decline over the last five years. With a B+ analyst rating and a median price target suggesting a potential upside of 50%, investors might consider this stock for future growth.

Analysts have a median price target of 195.00 for Luceco PLC, indicating a potential 50% increase from its current price of 130.00.

Lucid Group, Inc. (LCID) is trading near its 52-week low and has seen a slight increase of 0.70% in its share price recently.

LGCL's share price has been volatile, with weekly volatility decreasing from 20% to 14% over the past year, but it remains higher than 75% of US stocks.

The stock shows a positive forecast as the short-term average is above the long-term average, indicating a general buy signal.

Synthomer, a small-cap stock with a market cap under £400 million, presents a compelling opportunity with expectations to more than double its value. Investors should be cautious, however, as it has experienced a significant 1-year return of -55.87% and a staggering 5-year return decline of -88.77%, despite boasting an attractive dividend yield of 13.71%. With a current analyst rating of C, potential buyers should evaluate their risk tolerance before considering this investment.

Synchrony Financial (NYSE:SYF) has a consensus rating of 'Moderate Buy' from 24 analysts.

State Street (STT) has a consensus rating of 'Buy' based on analysis from 12 analysts.

Frontier Developments, a recognized name in software and gaming, has shown impressive performance with a 1-year return of 108.64%, although its 5-year return stands at -36.50%. Currently rated a C by analysts, the company is positioned well to leverage its recent successes and build upon solid foundations for future growth. Investors may find this an attractive opportunity, especially following a 2.9% increase in share price to 483.00 pence recently.

Frontier Developments shares increased by 2.9% to 483.00 pence, indicating strong momentum and a solid foundation for future growth.

Failure to deliver (FTD) occurs when a buyer or seller cannot fulfill their trade obligations, potentially leading to 'phantom shares' that may dilute the stock price.

Frontier Communications Parent, Inc. is rated as a Zacks Rank 2, suggesting it is a buy with expected above-average returns in the coming months.

EDF stock shows positive buy signals from both short and long-term moving averages, indicating a favorable outlook.

Lloyds Banking Group has experienced significant declines, with a 1-year return of -33.41% and a 5-year return of -58.55%. Despite these setbacks, the stock appears undervalued by approximately 39.2%, trading at 13.3 times forward earnings for FY2025 and dropping to 10.3 times for FY2026. Analysts rate the stock at A-, suggesting potential for recovery and making it a candidate for investors seeking undervalued opportunities.

Lloyds shares are currently trading at 13.3 times forward earnings for FY2025, decreasing to 10.3 times for FY2026, indicating expected earnings growth of 29.9% in 2026.

Lloyds Banking Group is considered undervalued by 39.2% according to our Excess Returns analysis, suggesting potential for price appreciation.

Ashtead Technology Holdings stands out as a strong recommendation for 2026, particularly appealing to investors interested in support services within the small-cap sector. While the stock has experienced a 1-year return of -25.63%, it boasts an impressive 5-year return of 155.25%, coupled with a dividend yield of 0.24%. Analysts project a potential share price increase, with targets ranging from 4,600p to 6,600p, indicating a favorable outlook despite recent performance challenges.

Analysts have a consensus rating of 'Moderate Buy' for Ashtead Group, with a price target range between 4,600p and 6,600p, suggesting a potential increase of 5.93% from the current price of 5,302p.

The median price target for Ashtead Technology Holdings is 684.00, with estimates ranging from a low of 560.00 to a high of 725.00, indicating a potential increase of 78.82% from the current price of 382.50.

The company offers a dividend yield of 2.62%, which may appeal to income-focused investors. However, its one-year return of 8.27% contrasts sharply with a steep five-year decline of 52.31%, indicating potential volatility. With an analyst rating of B+, there may be cautious optimism, but investors should weigh recent performance against long-term trends.

HCl is the fastest-growing IT services brand, with a year-over-year growth of approximately 16% in brand value, and a market capitalization of ₹4,56,574 crore.

Analysts have set a target price for LSEG between 11,000.00 GBp and 14,550.00 GBp, with an average target of 12,400.59 GBp, indicating a potential upside of 35.02%.

Michelmersh Brick Holdings presents an intriguing opportunity for investors with its low valuation and a forward PEG ratio of 0.5. Currently, the company offers a robust dividend yield of 5.35%, despite experiencing a 1-year return of -18.1% and a 5-year return of -35.58%. Analysts maintain a strong A- rating, with expectations for earnings to grow by 17.4% annually, signaling potential recovery and growth in the near future.

Analysts have set an average twelve-month price target of GBX 150 for Michelmersh Brick, indicating a potential upside of 77.10% from the current price of GBX 84.70.

Michelmersh Brick Holdings PLC's share price is currently 84.00p, unchanged from its closing price a week ago.

Michelmersh Brick Holdings is expected to grow earnings by 17.4% and revenue by 4.7% annually, with EPS projected to increase by 17.8% per year and a return on equity of 9.2% in three years.

Central Asia Metals stands out as a top small-cap selection, appealing particularly to those seeking reliable income through its attractive dividend yield of 6.44%. With a consensus "Buy" rating from analysts, this company demonstrates resilience, having delivered a 33.36% return over the past year despite a 5-year decline of 11.90%. Its strong financial health positions it well for investors looking for consistent payouts and growth potential.

The consensus recommendation for Central Asia Metals is a 'Buy', with a dividend yield of 6.5% over the past twelve months.

Analysts have set a median target price of 201.01 for Central Asia Metals, with a high of 221.18 and a low of 170.37, indicating a potential 2.03% increase from the current price of 197.00.

The consensus rating for Central Asia Metals is 'Buy', with 4 out of 5 analysts recommending a buy, none suggesting a sell, and 2 recommending a hold.

On The Beach Group PLC stands out as a small-cap player in the travel and leisure sector, currently offering a dividend yield of 1.83%. Despite facing a 12.07% decline in the past year and a 41.34% drop over five years, the stock is undervalued by 48% compared to its current price of 217.8 GBX. With an analyst rating of B+, this company remains an attractive option for investors looking for value in the market.

On The Beach Group PLC (OTB) is currently undervalued by 48%, with a market price of 217.8 GBX.

The median price target for On The Beach Group PLC is 317.50 GBX, indicating a potential 42.7% increase from its current price of 222.50 GBX.

Orbs (ORBS) is trading at $1.61, near the bottom of its 52-week range, and has dropped 8.00% since the last market close.

The major shareholder of On The Beach Group PLC is the company itself.

Essentra stands out as a strong pick among small-cap support services companies, receiving a solid analyst rating of B. Despite a challenging year with a return of -23.03% and a notable five-year decline of -70.87%, the company offers a dividend yield of 2.53%, appealing to investors seeking reliable income from financially healthy firms.

Forian Inc. has an average brokerage recommendation of 2.00, indicating a general consensus of 'Buy' among analysts.

Palantir's shares have increased over 2,400% in the last three years, positioning it as one of the most valuable technology companies.

Ford stock currently shows conflicting signals: a sell signal from the short-term Moving Average and a buy signal from the long-term average, suggesting a positive outlook overall.