Three of the best UK small-cap stocks to buy now

Investing in UK small-cap stocks does not necessarily mean exposure to businesses struggling against larger rivals. On the contrary, we actively seek smaller companies that dominate niches. They may not be FTSE 100 giants, but they are leaders in their specialist areas, with the scale, data and strategic positioning to thrive. The UK small-cap sector is rich with such firms. Market leadership in a niche area confers several key advantages. It can enhance pricing power, which is especially valuable in today’s inflationary environment, increasing the likelihood of profits. We place equal importance on competitive barriers and the structure of the industry in which the company operates. Without barriers to entry, competitors can swiftly erode profit margins even as demand grows. Here are three examples of smaller companies that we believe have an edge.

UK small-cap stocks to consider for your portfolio

MONY Group (LSE: MONY), owner of the MoneySuperMarket and Money Saving Expert brands, is one of the UK’s market-leading price-comparison platforms. It may not be the largest in every category, but it has the broadest offering, which is important because by offering a multitude of products – for example, current accounts, broadband, energy, loans and travel insurance – MONY frequently interacts with its customers. Its rewards programme, SuperSaveClub, goes further in helping to convert a one-off transaction into a recurring revenue stream and reduces MONY’s reliance on Google and television advertising. It is growing quickly: it had 2.1 million members and accounted for 16% of group revenues in 2025.

Concerns about the risks posed by AI have brought the shares down to attractive levels. There are also a number of barriers to entry that will help cement MONY’s competitive advantages, including regulation, links to the multitude of insurers and brand strength. It says something that Amazon attempted to enter this market in 2022, but pulled out 15 months later.

Moonpig (LSE: MOON) is a UK small-cap stock that dominates the country’s online greetings-cards market with a 70% share. That means data. Moonpig has more than 100 million customer reminders on its system, which it is using to convert one-off purchases into repeat business. Its subscription model, Moonpig Plus, has surpassed one million customers, and they are using the service not only to buy cards more often, but also to spend more by adding gifts. The business floated at an inflated price. Five years later, and with the share price about 50% lower, it now looks like a good investment.

Victorian Plumbing (LSE: VIC) is another market leader. Its acquisition of its (near) namesake Victoria Plum has cemented its strong market position, and the firm can now invest far more effectively in its brand. Its recent move to a new warehouse should enable it to scale, and it could double its sales within its existing infrastructure. Like Moonpig, Victorian Plumbing was a beneficiary of Covid and was overvalued at its initial public offering. More recently, the shares have been hit by concerns about UK consumer spending and its decision to invest in entering the homewares market. These concerns are temporary. The Iran conflict is pushing up inflation, delaying interest-rate cuts and has further eroded fragile consumer confidence. Nevertheless, consumer savings rates are high, and household debt-to-income levels are at a generational low. We see this as a strong platform for when consumers’ confidence does recover.

This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.