The last few months have seen something of a recovery for UK small and mid-cap shares, after a long spell of being very much unloved.
Is this a false dawn or the start of a real recovery? We're all familiar with the arguments that many of these companies appear to offer good value. But some recent number crunching has also given me a data-backed conviction that this could be a genuine turning point.
I’ve found that companies with StockRanks of 90 or above are currently concentrated in the small and mid-cap indices, with far fewer in the FTSE 100:
Index | StockRanks ≧ 90 |
FTSE 100 | 9% |
FTSE 250 | 12.4% |
FTSE SmallCap Ex-ITs | 18.5% |
Data: 20 June 2025
This initial finding surprised me a little given the recent strength of the FTSE 100. To try and find out more, I enlisted Alex’s help to dig into Stockopedia’s historic data.
We decided to investigate the average market cap of highly-ranked stocks over the last decade. I’ve never considered this relationship before. But it turns out that historically there has been a clear link between market movements and the market cap of highly ranked stocks:
What does all this mean?
Before I go any further, I need to clarify exactly what the chart above shows.
Grey line: this represents the FTSE All-Share index. While this index has around 550 members, FTSE 100 companies make up about 85% of the total market cap of the All-Share index.
For my purposes here, I’m viewing the All-Share as broadly equivalent to the FTSE 100.
Green line: this represents the median market cap of companies in the All-Share index with a StockRank of 90 or higher.
In practical terms today, this means that our median market cap company is somewhere in the top quarter of the FTSE SmallCap Ex-ITs index.
Historically, we can see that the median market cap of the top-ranked stocks has broadly tracked the progress of the All-Share index (and FTSE 100).
That relationship appears to have broken down since late 2023. This is where I think the opportunity lies.
If the historic relationship between market cap StockRank remains true, and if the FTSE 100 isn’t about to crash, then UK investors could now…
