I like to hold two or three small-cap stocks for their growth potential.

I like it best now Henry Boot (LSE: BOOT), a British company dealing in land promotion, real estate investments, development and construction activities. At least it’s worth paying more attention to because of that devastating name!

Joking aside, I think the company’s prospects look compelling, so I want to dig a little deeper. For the record, Henry Boot can be found at FTSE Small Cap index, and with a share price of close to 230p, the market capitalization is approximately £311 million.

Positive announcements

The stock started to rise in April after dwindling in the behind schedule spring of 2022. So I’m hopeful that something vital in the industry is driving this change in the nature of the stock.

Indeed, the company delivered some good news in its April 16 announcement, and it appears to have started a up-to-date growth trend.

The company announced the sale of 494 residential plots in Cambridge to Barratt Developments (now Barratt Redrow). The sale closed in July, providing Henry Boot with an internal rate of return of 15% per annum. So, we can say that it was a decent investment for the company.

Chief executive Tim Roberts said at the time of the sale that “continuous demand” the company was looking for its premium sites. It was “particularly encouraging” given tough market conditions and lower transaction volume, Roberts said.

It appears that the stock exchange has once again taken a positive view of the prospects for Henry Boot’s business. Perhaps that’s why the stock price is rising.

Roberts believes the sale demonstrates the company’s experience in obtaining construction permits for convoluted facilities and “guiding them through an increasingly cumbersome planning system“. Thanks to this skill, the company can sell plots to developers.

This example perfectly illustrates how a company makes a living. However, there have been several positive announcements since then and an sanguine interim results report was presented on 17 September.

An encouraging statement about the outlook

One risk with the stock comes from the sensitivity of Henry Boot’s business to general economic conditions. This is also influenced by the mood around the broader real estate sector. So this is one of those stocks that requires careful consideration and timing by potential shareholders.

Nevertheless, the company’s September statement regarding its prospects remains sanguine. A strengthening economy and the prospect of lower interest rates are likely to assist business. So maybe it’s a good time to focus on stocks.

Meanwhile, multi-year dividend growth is solid, with a projected 2025 yield of around 3.6%.

I think this is an attractive level of shareholder income. So if I had spare cash to invest now, I would do further research to consider buying a few stocks for November and beyond. If the economy and housing market continue to improve, Henry Boot could be in a good position.