AIM for Growth

Healthcare demand is on the up, driven by global thematic themes such as a rise in chronic diseases, increasingly sedentary lifestyles and aging populations. As a result, the sector is predicted to grow with global healthcare expenditure forecasted to increase at an annual rate of 5.4% up to 2020, reaching over US $10 trillion according to Deloitte.  DEMOGRHIC SHIFTS The world’s population is continuing to rise, with the United Nations predicting a one billion increase by 2025 with 300 million being the age of 65 or older. The growing population is also seeing a shift towards the middle class, with developing economies driving growth. The Brookings Institute predicts that 65% of the global population by 2030 will be middle class. The global population, due to increasing urbanisation and standards of living, are becoming increasingly sedentary. Consequently, this is driving the increase of chronic diseases such as diabetes and obesity, with active lifestyles proven to redu

A stock that I have owned for the last few years is banking conglomerate HSBC, which operates in 67 countries worldwide with Asia its largest market accounting for 45% of total revenue. The bank has over $2,500 billion assets under management globally and is the seventh largest in the world, generating reported revenue in 2018 at $53 million. The bank also delivers a strong yield of 6% that provides a good source of income generation for an investor’s portfolio.  ASIA As mentioned, the business generates 45% of total revenue from Asia, providing geographical diversification for investors versus UK-focused FTSE banks such as Barclays and Lloyds. Due to the global presence of the bank, the stock offers defensive qualities to investors. Positive economic growth is also occurring in the Asia Pacific region with disposable income rising which should relate to people having more funds available to invest or save, resulting in an increase in demand for banking and investment services. A

The growing emergence of digital platforms has seen the rise of companies such as Alphabet (Google), Uber and Deliveroo grow to global dominance. These companies are becoming ever prominent in society, highlighted by how ordinary terms have been replaced by brand equivalents such as to search the web is now ‘to Google it’ and ordering takeaway is now ‘I’ll get a Deliveroo’. These companies are disrupting the global economic market through technology-driven innovation, in which investment opportunities are rife. In this blog I look at the founding concepts of these companies through Srnicek’s work on platform capitalism and how this has presented investment opportunities within the different types of platforms.  PLATFORMS All companies mentioned are built on digital platforms, which monopolise and utilise data. For example, Google uses vast data amassed from Internet users and analyses it to produce highly segmented audiences that are more valuable to advertisers. As such, Google

The UK law sector is one of the leading global legal markets, rated as the second largest in the world by fee income and was valued at £35.1 billion in 2018. This represents a 6.3% increase, or a 3.7% real increase if you factor in inflation from the previous year, showing a healthy growth within the sector. The market itself is very diverse with over 9,500 law firms and 91,000 solicitors in the UK showing not only the high demand for legal services but also the high levels of competition that exists. It is therefore important to look for firms that stand out in the market and can continue to deliver strong performance. MARKET The market looks set for sustained growth, with the Law Society predicting 2.2% average annual growth from 2019-2025 with a soft Brexit, or dropping to 1.5% with a 'harder' deal. Brexit will be a key factor on the sector’s growth rate due to its focus on the UK domestic market, increasing its sensitivity to Brexit outcomes and the surroundin

Back in November when Aviva’s share price dropped below £4 I thought that it would bounce back after a sharp market sell off. Though shares did continue to drop further, all the way down to below £3.65 in December, the market returned to normal levels of £4.30 before again dropping off to sub £4 levels recently.  The question for investors therefore is, can the stock once again rebound and return to the £5 mark or will it see another sell-off to drop even further than current valuations. NEW CEO Aviva is taking steps in a new direction with the departure of former CEO Mark Wilson, and the arrival of Maurice Tullock as his replacement. Though people were happy with Wilson’s revival of Aviva, it is arguably the right time for someone new as Wilson has completed his task at the company.  Further management shake ups are happening with Aviva’s chief of finance, Tom Stoddard stepping down at the end of the year, ending a five year reign with the company. The new CEO also plans t

I recently shifted my investment strategy to focus on UK growth stocks in the search for higher returns than that on offer in the FTSE 100. As a result, this has lead my research into the FTSE AIM index, which is a market for smaller growth companies to raise capital to fund expansion. The AIM index provides a great alternative to the FTSE 100 for portfolio selection and offers a host of benefits for new investors. SOURCE OF GROWTH The FTSE AIM 100 is full of great stocks, including names such as Fevertree, Boohoo Group PLC, and my previously discussed AB Dynamics . Such stocks have produced stunning returns over the years such as a 1500% return since 2015 for AB Dynamics and over 1300% return for Fevertree within the same time period. It is important to understand though that due to such great returns there is the potential for equally large downside. For example, the recent collapse of Burford Capital which dropped over 60% in one week. This is why I would suggest that AIM

If you like the look of FTSE 100 data giant Experian then it may be worth looking in a similar sector at the AIM growth company, GB Group. Due to less coverage on the index, there is potential for the stock to achieve relatively higher levels of growth and hence deliver greater returns over the medium to longer-term for investors. WHAT THEY DO GB Group is an identity management company, with a market cap of £1.13 billion and is listed on the software and services sector of the FTSE AIM All-Share index. The company centers on the analysis of data in a variety of services such as user identification, customer on-boarding, and employee screening. GB Group has performed well for investors in the past, achieving a 120% return for investors since 2016. In this blog, I explore why I think the business is positioned to continue to provide superior returns in the long run. BIG DATA I recently spoke about the growing importance of big data in today’s society, with the

Due to lower coverage versus larger market cap stocks like FTSE 100 giants Hargreaves Lansdown and Experian, investing in AIM stocks can be hard. Especially when you are trying to come up with new companies that you know little about or have never heard of before. Here I discuss my tips for how to start the process of creating a pool of stock ideas to look further into, conducting your own analysis to further examine them. For example, looking at valuation metrics such as operating margin and return on capital employed, and identifying areas that will make the business profitable for years to come such as trends and clients. PAST PERFORMANCE When investing I like to look for companies that have a track record of robust performance. Though past performance is not an indicator of future returns, I believe that it does highlight that sentiment towards the business is improving which generally occurs from improving valuation metrics and the business being able to continuously beat m

Big data is becoming increasingly prevalent in everyday lives. It’s influencing all aspects of life, with an increasing reliance on technology such as smartphones and the growing usage of the internet of things (IoT) such as Amazon’s smart speaker Alexa. This has caused large inflows of big data that companies can use to their advantage, presenting a variety of investment opportunities. BIG DATA INDUSTRY  According to the International Data Corporation (IDC), worldwide revenues generated from big data are forecasted to increase by 12% from 2018, reaching $189.1 billion in 2019. Furthermore, looking specifically at the software and services sector, big data market revenues are projected to rise from $42 billion in 2018 to $103 billion by 2027. Positive forecasted growth is reflected by the amount of high performing companies that populate this sector in the FTSE AIM All-Share. Geographically, the United Kingdom will become the third-largest generator of big data analyti

In this blog I look at different funds, providing insight for personal investors. The advantage of funds is that they allow retail investors to pool investments so that they can spread risks by having access to a wider portfolio than they otherwise would be able to by themselves. GLOBAL TECHNOLOGY This blog will focus on funds specifically targeted at the Global technology market, with an emphasis on US technology companies such as Microsoft, Facebook and Alphabet (Google). For private investors in the UK, it can be expensive to invest abroad with higher costs such as currency exchange costs. However, by focusing on the UK in isolation limits your geographical asset allocation. This could increase investment risk but also decrease the potential investment opportunities on offer from foreign markets such as the US. FUNDS Three funds that look of interest are Polar Capital Global Technology, Janus Henderson Tech, and AXA Global Tech. I will look at each of the funds' equity

In March I invested in the challenger law firm Keystone Law. Though performance has only seen a slight upturn with a 6% increase since my investment, I still believe that the AIM stock has a bright future going forward. The company historically has done very well, with a rise of 174% since it first listed on the AIM market back in late 2017 and now has a market cap of £163 million.  DISRUPTIVE MODEL Keystone Law as referenced are situated in the legal services sector but offers a different approach to other law firms, using ‘technology and modern working practices’ to disrupt the industry. The firm's business model relies on self-employed lawyers who work from their own offices but are supported by Keystone Law's head office, allowing them to focus on value-adding and revenue-generating legal services. In return, Keystone Law charge 25% on fees generated. The company is underpinned by solid valuation metrics, with an operating margin of 11% and a return o

A stock that I have been following for a while now is growth AIM small-cap stock Bioventix, who specialise in sheep antibodies and currently has a market cap of £191 million. The shares currently trade at over £38, which appears expensive at first glance. However, the company has performed extremely well over the last 3 and a half years since 2016, producing a return of 197% for investors. To better understand the stock’s investment potential, investors need to look deeper into the company, researching areas such as its current business model and current financial situation. This will provide a clearer understanding as to whether the stock will provide future returns.  BIOTECHNOLOGY The firm operates in the biotechnology space, specialising in antibodies produced from sheep for use in diagnostic applications, for example, in the testing of drugs of abuse. Some of its top clients include Siemens and Philips, which supply testing machines to hospitals.  These compan

When investing in the UK market I normally focus my research on FSTE AIM stocks as I think this is where greater growth can be found as the FTSE 100 is very well covered in comparison to small and mid-cap stocks. This means that the market has priced in future growth for the relevant companies.  However, the FTSE 100 does offer a variety of companies that can provide a good source of steady growth to mitigate risk in your portfolio against smaller, higher-risk growth stocks. A FTSE 100 giant that I think will do well over the long term is Experian, providing a steady stream of growth to support an investor’s portfolio.  WHAT THEY DO? Experian is a global information servicing company, supplying global services to over a billion people. They are most famous for their credit checks business, currently one of the top three credit checking agencies globally, but they also offer a variety of information processing services.   From an investment perspective, the stock is cur

At the beginning of the year I bought AIM super stock, AB Dynamics and after 5 months it has earned a return of over 50%. This is extremely impressive compared to a return of around 12% for the FTSE AIM 100 and a rise of only 7% for the FTSE 100 for the same period.  The company’s high growth performance isn’t just in isolation either, with the stock producing over a 357% return since the start of 2017, suggesting that this isn’t just a lucky year or an overhyped valuation by the market. So the question is, can the stock continue to grow?  WHAT THEY DO AB Dynamics supply integrated test systems for the automotive industry, with a client list that includes major brands such as BMW, Audi, and Chrysler. The stock is currently listed on the FTSE AIM market, with a market cap of £471 million.  The testing industry may be an unglamorous part of the automotive industry versus investing in brands such as BMW and Rolls Royce, but it is an important part of the value chain f

I recently spoke about Burford Capital and the potential troubles it faces in the short-term due to the suspension of Woodford’s Equity Income Fund. Another stock that is also struggling, as a result, is Hargreaves Lansdown, the investment service provider, with its share price dropping over 20% in the last month. This is a considerable drop and requires investors to consider if this is a short term reaction to recent events or the beginning of a longer-term shift. Therefore, investors need to identify if this a sign to sell as the company is on a long-term downward trend, or is this a buying opportunity due to market overreaction? WOODFORD The recent dismal performance and resulting closure from multiple redemptions of the Woodford Fund has resulted in a backlash on Hargreaves Lansdown share price. This is because the company had continued to champion the fund, supporting it via its new and updated Wealth 50 platform when perhaps other funds were more justified. The disappoin