- A majority of the AIM listers have yielded double-digit return in last almost a year
- AIM listed businesses are closely linked with the domestic economy and are significant contributors to the UK’s economy
- With global supply chains not in the best of health, investing in domestic businesses can be considered a good option
Despite the glut of adversities prevailing in the UK’s economy with reference to Brexit and second lockdown, investors are keeping a close watch on the Alternative Investment Market (AIM) listed companies.
From newly established, venture capital-funded start-ups to more mature and well-established organisations, the AIM segment of the London Stock Exchange covers them all. The market sentiment, in general, has been jolted globally by the spill over of the coronavirus pandemic. Investors are, therefore looking to invest in the domestic economy. The AIM listed companies are significant contributors to the UK’s economy as these businesses are mostly resource companies, pharmaceutical or technology companies that are always in demand.
In this article, we would put our lens through FTSE AIM 100 listed companies. Investment in these companies is a bit riskier in contrast to the FTSE 100 or FTSE 250 indices. Investors with a big heart and a greater risk appetite consider investing in these stocks.
- Abcam Plc
A global leader in the supply of life science research tools, Abcam Plc (LON: ABC) witnessed improvement in trading conditions in China and laboratories started to reopen in some countries with a gradual increase in activity since April 2020. As lockdown restrictions were lifted in June, the trading improved, while the revenue was significantly impacted in the month of April and May.
The Company witnessed a strong net cash position of £80.9 million, with a net cash inflow from operating activities of £63.0 million and proceeds of £110 million equity placing in April 2020. In FY20, Abcam’s total reported revenue remained broadly flat year on year at £260.0 million (FY19: £259.9 million)
Abcam has shown a steady increase in activity across all regions, with re-opening of laboratories in some European conditions and China improving gradually. During the year, the Company has distributed £25 million of dividend to shareholders. The life sciences company reviewed its capital allocation during the second half of 2020 with the intention to prioritise growth investment to maximise long-term value creation. ABC shares delivered a price return of nearly 20 per cent in the last one year.
- Asos Plc
UK listed retailer, Asos Plc (LON: ASC) has delivered a strong financial performance in the financial year 2020 despite the odds. Both the top-line and the bottom-line performance has improved along with profitability margins. The Company is likely to do well in terms of underlying profitability. Despite the short-term uncertainties, Asos is well-positioned to tap any opportunities coming its way as it is making relentless efforts on improving agility, resilience, and warehousing capacity while adhering to social distancing guidelines. Asos is continuously making investments in infrastructure and technology.
The revenue for the year 2020 was up by 19 per cent, primarily driven by strong growth across multiple locations and an increase in customer base. This led to improved profitability and solid cash generation.
Despite a challenging trading environment, the high-street retailer has shown operational resilience and agility in terms of the supply chain and warehousing management. Notably, Asos managed to reduce its non-strategic cost substantially.
ASC shares delivered a price return of more than 40 per cent in the last one year.
- Avacta Group Plc
FTSE AIM All-Share listed Company, Avacta Group Plc (LON: AVCT) is engaged in the development of immunotherapies for novel cancer and other critical illnesses. The Company successfully completed fundraisings for expansion of Therapeutics and Diagnostics programmes to improve its liquidity position. The Company completed fundraisings of £53.8 million for expansion of its programmes (Therapeutics and Diagnostics), and the cash balance stood at £54.5 million as on 30 June 2020.
Avacta has joined forces with AffyXell and Daewoong Pharmaceutical to develop stem cell treatments using Affimer therapy for Covid-19 patients. Due to resilient performance in Therapeutics and Diagnostic business, the overall revenue of the Group increased to £1.8 million in the first half of the fiscal year 2020. Avacta has recently launched SARS-CoV-2 BAMSTM Research Test for the scanning of the deadly virus.
AVCT shares have delivered a staggering price return of more than 1000 per cent in the last one year.
- Blue Prism Group Plc
FTSE AIM listed automation software company, Blue Prism Group Plc (LON: PRSM) recorded a growth of 70 per cent year-on-year during the first half of 2020 and the Company had secured £1 million in new monthly recurring revenue. The recent fundraising of £100 million bolstered the Company’s balance sheet position to sustain prolonged disruption due to coronavirus pandemic. Moreover, the customer base of the company has increased to 1,864 customers.
The tech sector has broadly remained unfazed by the onslaught of the novel coronavirus. More and more businesses are transforming their existing business models for the digital age. Automation and robotics would be key to hedge against future pandemics.
PRSM shares have delivered a staggering price return of more than 75 per cent in the last one year.
- Boohoo Group Plc
FTSE-AIM listed online fashion retailing Company, Boohoo Group Plc’s (LON: BOO) profit swelled from GBP 12.44 million in 2016 to GBP 72.88 million in 2020, at a compounded annual growth rate (CAGR) of more than 55 per cent during the course of four years. During the first half of the financial year 2020, the company recorded strong revenue growth of 45 per cent across all brands and geographies.
Boohoo has improved its full-year guidance for revenue and adjusted EBITDA for 2020.
Since the peak of unprecedented crisis in March, Boohoo shares have delivered a price return of more than 65 per cent.
With another lockdown a possibility, these stocks are on the radar of many investors as more price correction is expected. Trading has drastically improved since the lockdown was lifted. There is still a lot of meat left in these AIM stocks. However, investors should seek professional advice or carry out proper research before investing in these stocks. With global supply chains not in the best of health, investing in domestic businesses can be considered a good option.