Investing.com -- Stifel analysts highlighted their top small and mid-cap UK stock picks for 2025, focusing on sectors such as industrials, healthcare, and technology.
Industrials: AB Dynamics
AB Dynamics stands out as Stifel’s top small-cap pick in the industrials sector. The firm said the company is poised to triple its profit in the next 3-5 years due to its significant investments in operations and infrastructure.
Stifel notes the potential for "sharply rising margins and strong cash flow" driven by "rising globalising ADAS regulation" and ongoing M&A activities. The analysts believe that the company’s shares could more than double if medium-term goals are achieved.
Healthcare: Hikma Pharmaceuticals (OTC:HKMPY)
In healthcare, Hikma Pharmaceuticals is noted for its diversified operations across injectables, branded, and generics. The injectables segment, particularly in the US, contributes significantly to the company’s EBIT, while the branded division leads in the MENA region. Stifel highlights the company’s focus on complex generics and specialty products, predicting steady growth across its divisions.
Technology: Kainos
Kainos is Stifel’s top technology pick, benefiting from its positioning in government digital transformation and its strong partnership with Workday (NASDAQ:WDAY). The company’s focus on high-margin Workday products and a stable business model with good cash generation are seen as underpinning its growth prospects. Stifel anticipates a healthy backlog and further business wins, supported by the return of CEO Brendan Mooney.
Metals & Mining: Endeavour Mining
Endeavour Mining is highlighted for its diversified portfolio of low-cost, long-life mines in West Africa. Stifel expects strong free cash flow to reduce net debt and support shareholder returns. The company’s sector-leading margins and discovery costs make it an attractive investment for 2025.
Other names that made the list include Melrose (LON:MRON) due to its strong profitability and incoming inflection, Animalcare, based on its Randlab acquisition enhancing its growth prospects, and Persimmon (LON:PSN) as “housebuilders offer “compelling risk/reward here.”
Mondi (LON:MNDI), Restore, Kitwave, Future, Ashtead (LON:AHT) Tech, and Assura were other names highlighted by the firm.