Want £10,000? I’d buy £2,000 of this risky UK small-cap stock and wait

first_img Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. Want £10,000? I’d buy £2,000 of this risky UK small-cap stock and wait Paul Summers | Wednesday, 26th August, 2020 | More on: HZM The high-calibre small-cap stock flying under the City’s radar Paul Summers owns shares of Horizonte Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!center_img Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Image source: Getty Images Investment returns tend to be positively correlated with risk. This is why small-cap, UK-listed, mining, oil & gas and biotechnology stocks can multiply investors’ money in a day while your typical FTSE 100 giant might struggle to do so in a decade.Pick well and you can make a shedload of money. Pick poorly, however, and you could lose all your capital. Here’s one stock that I think might just do the former.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Soaring small-capI’ve owned shares in would-be nickel producer Horizonte Minerals (LSE: HZM) for a few years now. For much of this time, my investment has been under water. Mercifully, that’s now changed.Horizonte’s share price is up a little over 50% in the last month alone. Had you picked up the shares back in the dark days of March, you’d already be sitting on a gain of around 240%.Aside from the bounce seen in markets generally, the reason for the price charge is down to Horizonte getting ready to build its Araguaia ferro-nickel mine in Brazil. This is one of two Tier 1 projects that, importantly, are 100% owned by the company.Show me the money!Earlier this month, Horizonte announced that it had mandated five international financial institutions to raise up to $325m in debt to part-fund the Araguaia build. Coronavirus-dependent, this should be done by the end of 2020. The remainder of the money needed ($125m) will then come from offtakes and a likely equity raise. Should things go swimmingly (and existing holders aren’t massively diluted), I can see the small-cap’s shares being worth multiples of their current value in a few years. This is assuming, of course, that Horizonte isn’t acquired beforehand. With few nickel-focused assets so close to production, it must surely be on the radars of the usual (mining) suspects.Nickel price playA takeover becomes even more likely if the price of nickel keeps rising. Thanks to growing demand from the EV battery sector and stainless steel market, there’s certainly a chance it could hit the $16,133/t analyst consensus for when Araguaia is ready to roll.The ‘Tesla-effect’ can’t be discounted either. Let’s not forget that Elon Musk recently urged miners to dig up as much nickel as they could, adding that Tesla would award a “giant contract for a long period of time” to the company that does so in an efficient and environmentally friendly way. This is where Horizonte’s second Tier 1 asset — Vermelho — comes into play. Before you buy this small-cap…But let’s not get ahead of ourselves. Despite recent progress (and a £15.6m cash position), Horizonte remains a high-risk proposition. Plenty of miners come a cropper on funding and the small-cap could still rip the shirt from your back.Even if all the funding is secured, there will be traders ready to bank profits. This ‘sell on the news’ strategy means those intending to hold for the long term should brace themselves for volatility.It also makes it essential for them to be diversified elsewhere (as I am) and not bet the house (which I haven’t). Like all investments, your exposure should take into account your financial goals, age and risk tolerance. If your stake keeps you awake at night, you’re probably doing it wrong. All caution (and bias) aside, however, there’s a chance the reward might be worth the wait. Our 6 ‘Best Buys Now’ Shares See all posts by Paul Summerslast_img

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