AIM for Growth

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 ana...

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.  The...

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...

Burford Capital Ltd (BUR) is one stock that I’m still unsure about as it’s very difficult to understand how the business is doing, and therefore understanding its long term profitability proves a problematic task. To give context, Burford Capital is listed on the FTSE AIM 100 and is an investment firm that specialises in generating finances for litigation, along with associated activities such as advisory services in the legal field. WOODFORD Though the stock isn’t in the LF Woodford Equity Income fund, it is held in another Woodford Investment fund, Woodford Patient Capital Trust. This is a closed-ended fund, aimed at delivering long term growth. However, due to being under the same management in Woodford, the firm could suffer indirectly from a decrease in sentiment towards Woodford’s investment approach. VOLATILE The business has done extremely well in the long term, recording a return of 691% since 2016. However, the stock has been particularly volatile in the sh...