The star small and mid-cap stocks income investors have overlooked
Thomas Moore, senior investment director, Aberdeen, highlights three company stocks as he shares where he would put his money


The Aberdeen Equity Income Trust uses an index-agnostic approach, scouring the entire UK market to identify companies where change has not been fully recognised by investors. This strategy acknowledges that some of the best investment opportunities can arise from under-researched parts of the market, where valuation mispricings are most significant.
As a result, the trust’s portfolio often looks very different from other investment vehicles offering access to UK equity income. As of its latest year end, 51% of the trust’s portfolio was invested in companies outside the FTSE 100 index.
This approach provides access to the broadest range of income-generating investment ideas, including many stocks that offer attractive dividend yields and dividend growth. As their prospects are recognised by the wider market, they can be re-rated, supporting capital growth. With the macroeconomic backdrop beginning to improve and investors looking beyond the FTSE 100, we believe this index-agnostic approach has the potential to reap significant rewards.
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A valuable niche
Galliford Try (LSE: GFRD), a small construction company, is in a favourable position with a growing order book across niche infrastructure areas such as water, defence, prisons and affordable homes. These activities address social needs, boost productivity and generate a multiplier effect for the wider economy, making them a key focus for policymakers.
Discipline across the sector has improved following some high-profile failures, with fewer contractors bidding on a fixed-price basis, resulting in a more rational competitive environment. This is helping to drive consistent earnings growth, with operating margins on track to double as the order book expands. We see Galliford Try as an example of a defensive small cap value stock with clear visibility on earnings and dividend growth.
TP ICAP Group (LSE: TCAP) is the world’s largest inter-dealer broker and provider of over-the-counter data, with a market share of approximately 40%. The company, a member of the FTSE-250 mid-cap index, boasts an entrenched market position, unrivalled connectivity and long-established relationships with top-tier clients. TP ICAP is benefiting from cyclical tailwinds as geopolitical instability and interest-rate volatility help drive up volumes, making it a good diversifier for the trust’s portfolio. TP ICAP has a growing data business called Parameta Solutions, which it plans to float on the New York Stock Exchange. This is a key catalyst for the share price, as it should force the equity market to put a value on this asset.
Petershill Partners (LSE: PHLL) is the private markets division of Goldman Sachs Asset Management. This FTSE-250 business owns stakes in 20 private firms, providing investors with access to this fast-growing sector. Petershill’s assets under management have expanded at a compound annual growth rate of 23% since 2018, outpacing the wider industry. Management expects to raise another $20-$25 billion of funds in 2025, continuing their strong growth record.
We increased our holding after concerns over rising interest rates caused the stock to fall to around half its book value. We believe Petershill Partners exemplifies the bargains available among under-researched mid-and small-cap stocks.
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