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Summary
- FTSE AIM All-Share index has been more resilient in contrast to other indices
- There are many stocks on the index who have delivered near three-digit returns on a year to date basis
- The right stock selection on small market capitalisation index could even outperform the mainstream stocks
The stock market investing scenario has gone through the darkest hours in recent times due to the economic impact of the novel coronavirus. The investors have witnessed massive wealth erosion in the stock markets. The deadly pandemic which engulfed more than 210 countries across the world, sparked a bloodbath in the global capital markets.
Now we are in the mid of 2020, let us look at the major indices to get an idea of the catastrophe caused by the pandemic. Since January, London’s Broader Equity benchmark index, FTSE 100 has fallen by nearly 17.27 per cent. However, the FTSE AIM All-Share index has fallen by just 7.30 per cent since January.
Unlike FTSE 100 listed business, the FTSE AIM companies are major contributors to the domestic economy. These companies have wider coverage across multiple sectors and are not just restricted to niche segments.
There are plenty of reasons to look forward to FTSE AIM stocks. Although the British Prime Minister believes that the United Kingdom has passed its peak, but the possibility of the second wave of the deadly pandemic cannot be ignored. Last weak sudden rise in the number of infected people in the United States and the Asia Pacific sent jitters to the global stock markets.
The slower reopening of the economies and dented consumer confidence has added to the existing challenges faced by the businesses and the economies around the world. However, throughout these turbulences, the domestic economy has played a significant role so far. In addition, the British government has launched several support schemes to support these businesses.
According to experts, investors should consider investing in the UK’s domestic economy by taking exposure in the FTSE AIM stocks. These are quite affordable in comparison to the blue-chip stocks. Right stock selection on small market capitalisation index could even outperform the mainstream stocks. Most of the asset managers and investors tend to include AIM listed securities in their portfolio.
The AIM listed businesses are mostly resource companies, pharmaceutical or technology companies. The innovative products or services devised by these companies could help the UK’s economy to come out of recession. For instance, a breakthrough in drug development can help in containing the spread of the pandemic. Experts fear that the economy is heading towards a U-shaped recession. Meanwhile, the piling debt of UK businesses is mounting further pressure on the economy.
UK stock market is currently facing a plethora of uncertainties and investing in AIM stocks amid these challenges is not for the faint-hearted. Nevertheless, a significant amount of exposure to AIM stocks could help in boosting the overall performance in the long run.
However, investors should take a careful approach while investing in AIM listed securities. The investors could look at trading volumes for ensuring sufficient liquidity in the stock. In addition, the investors should analyse the historical shareholding pattern by institutional investors or promoters to mitigate risks of price manipulations.
In this article we are going to discuss insights about few stocks which operate in the different spheres of the economy such as Pharmaceuticals, Financial Services, and General Retailers; quoted on the FTSE All-Share index of the London Stock Exchange (LSE). The stocks under review are Indivior Plc, CMC Markets Plc and AO World Plc. We have considered these stocks based on their Year to Date performance.
Indivior Plc: YTD Total Return- 105.80%
Indivior Plc (LON:INDV) is a speciality pharmaceutical company which focuses on drug development for opioid addiction treatment. The total net revenue of the company fell by 35 per cent at the constant currency to $153 million in the first quarter of 2020 due to the economic impact of the novel coronavirus. However, due to a prior year one-time net revenue adjustment in Canada and modest volume growth in Australia, Rest of World net revenue increased by 31 per cent at constant exchange rates to $48 million. The company’s Gross Margin stood at 85 per cent in the first quarter of 2020. In the wake of market disruptions caused by the COVID-19 pandemic, the company withdrew its FY 2020 guidance.
Indivior Plc shares were trading at GBX 75.30 at the time of writing before the market close (at 9:45 AM GMT+1) on 22nd June 2020, down by 6.17 per cent versus the previous day closing price. The stock delivered a YTD total return of 105.80 per cent.
CMC Markets Plc: YTD Total Return- 87.20%
UK based financial services company, CMC Markets Plc (LON:CMCX) is a provider of online and mobile trading platforms, which facilitate the trade of market securities listed in global stock markets. The company is up for a solid start in the first quarter of 2021.
The company’s Net operating income was up by 93 per cent to £252.0 million in the fiscal year 2020. The company’s Profit before taxation was up by 1,459 per cent to £98.7 million in the fiscal year 2020. The company’s total Ordinary dividend per share was up by 640 per cent to 15 pence in the fiscal year 2020.
CMC Markets Plc shares were trading at GBX 270.50 at the time of writing before the market close (at 9:59 AM GMT+1) on 22nd June 2020, down by 1.46 per cent versus the previous day closing price. The stock delivered a YTD total return of 87.20 per cent.
AO World Plc: YTD Total Return- 63.90%
AO World Plc (LON:AOL) provides consumer electronics and small domestic appliances in the United Kingdom. For the first half of 2020, the company’s total revenue surged by 16.3 per cent to £470.1 million in contrast to the corresponding period of the last year. The company is facing certain headwinds with respect to macro-economic factors such as Brexit and the novel coronavirus. The company’s Total UK revenue was up by 20.3 per cent to £402.7 million.
AO World Plc shares were trading at GBX 149.39 at the time of writing before the market close (at 10:28 AM GMT+1) on 22nd June 2020, up by 0.94 per cent versus the previous day closing price. The stock delivered a YTD total return of 63.90 per cent.
