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- Investing in AIM stocks over the long run could provide investors with huge inflation adjusted earnings.
- AIM listers are important contributors to UK’s domestic economy.
The Alternative Investment Market or AIM space is one of the most sought-after choices for businesses hailing from a variety of sectors, including early stage, venture capital-backed companies. The AIM space provides companies with a more relaxed regulatory framework in contrast to the main market of the London Stock Exchange (LSE), thereby granting easy access to funds.
The AIM space, which has more than 3,000 companies listed, is the sub-market of LSE. Investing in sound companies listed in the AIM segment can lead to gigantic returns for the investors. The AIM space also has good dividend paying stocks. Investors seeking passive income can consider these stocks.
Also, the AIM listed companies are significant contributors to the UK’s economy in contrast to the Footsie-listed companies that have a global presence. Post-corona crisis, several nations are stressing upon self-reliance, sustainable development, which creates a huge potential for domestic players.
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Also read: Top 5 AIM stocks to look for in 2021
Let us put our lens through some of these stocks.
- Avacta Group Plc
The FTSE AIM All-Share listed Company, Avacta Group Plc (LON: AVCT) announced the signing of a collaboration agreement with Bruker (Bruker Corporation) to evaluate the utility of BAMSTM (bead assisted mass spectrometry) test for Covid-19 infection in January. BAMSTM was developed jointly by Adeptrix Inc and Avacta Group.
During the first half of the fiscal year 2020, Avacta’s revenue increased to £1.8 million, primarily driven by solid performance in the therapeutics and diagnostic business. The company reported a higher operating loss for the period, reflecting higher research and amortisation of development costs. Notably, AVCT shares closed at GBX 197.50 on 4 March 2021, up by 3.95 per cent.
The company successfully completed fundraisings of £53.8 million for expansion of therapeutics and diagnostics programmes, and its cash balance surged to £54.5 million as on 30 June 2020. AVCT expanded license and collaboration with AffyXell and Daewoong Pharmaceutical Co, to develop stem cell treatments using Affimer therapy for coronavirus patients.
The company has signed multiple contracts in South Korea and the UK to tackle the impact of the Covid-19 crisis and developed different tests and therapies to detect coronavirus. The company has shown a decline in financial performance in the first half of the financial year 2020.
Avacta Group expects to achieve several milestones with the launch of a Phase I study for the first pre|CISION pro-drug, AVA6000 pro-doxorubicin and rapid coronavirus antigen lateral flow test based on saliva. The company has a pipeline of opportunities created by Covid-19 spike protein binding Affimers. The Company expects FY2020 to be a transformational year, as it works hard with partners to deliver growth opportunities. AVCT shares delivered a staggering return of 690 per cent in the last one year.
- Ceres Power Holdings Plc
FTSE AIM UK 50 Index listed company Ceres Power Holdings Plc (LON: CWR), which specialises in low-cost, next-generation fuel cell technology signed a strategic partnership with AVL List GmbH in December 2020. The partnership is expected to accelerate customer adoption and product development of solid oxide fuel cell (SOFC) technology. Shares of Ceres Power has delivered an enormous return of 221.43 per cent in the past one year.
The company delivered a solid performance over the course of past 12 months ended 30 June 2020 that indicates a positive outlook for the business soon. The company has a strong pipeline of £54 million as of 30 June 2020, along with an order book of £14 million. The company has also announced the scaling up of an aggregate 250 MW of manufacturing capacity for 2024 that provides them with the visibility of high margin royalty revenues. CWR shares closed at GBX 1,080.00 on 4 March 2021, down by 9.70 per cent.
- Fevertree Drinks Plc
The AIM-based beverages company Fevertree Drinks (LON: FEVR) has a strong financial position, which will enable them to remain focused on the long-term growth opportunity. The company managed to establish itself in a market-leading position in multiple key markets. The company performance faced several challenges in the wake of Covid-19 pandemic due to lockdown restrictions and store closures. The company expects 2020 revenue to be around £252 million, ahead of guidance. Fevertree Drinks is committed to making an investment in future opportunities to deliver sustainable growth during the long-term for their stakeholders.
The company has delivered strong performance, generated diversified revenue streams to mitigate the impact of the Covid-19 pandemic on the trade. The company maintained the position of number one brand in the mixer category at retail in the UK and delivered a strong performance in the US ahead of market expectations.
In the last one year, the Company delivered a significant return of 83.62 per cent and has delivered higher returns in contrast to the benchmark Index (FTSE-AIM Index).
The company expects full-year 2020 revenue to be around £252 million, reflecting a strong performance during the second half of 2020 across its key markets, according to its recent trading update. The Off-Trade sales from the UK business surged by 20 per cent, reflecting the growth in popularity. The total revenue from the US business went up by 23 per cent, reflecting significant momentum. The company made excellent progress in Europe, Canada, and Australia, reflecting strong Off-Trade sales.
During the period, the Company had a strong financial position and cash increased by 12 per cent on a year-on-year basis. FEVR shares closed at GBX 2,345.00 on 4 March 2021, down by 0.90 per cent.
- Pan African Resources Plc
UK-based Gold miner Pan African Resources Plc (LON: PAF) delivered a strong operational and financial performance, with net debt decreasing by 47.3 per cent and Record rand dividend payment in December 2020 of US$17.8 million in the six-month period ended 31 December 2020. Gold production was in line with the 2021 full-year production guidance. Notably, shares of Pan African Resources have delivered an enormous return of 50.09 per cent in the past one year.
During 2020, the miner had decent fundamental metrics as it has maintained a net margin and ROE above the industry median. The miner witnessed a surge of 178.2 per cent YoY in net cash through operating activities.
The miner also recorded a surge of 72.9 per cent YoY and 85.1 per cent YoY in the adjusted EBITDA and earnings per share respectively during the period. Notably, the miner made a record dividend payment of USD 17.8 million to shareholders in December 2020.
The company saw an improvement in operational and financial performance, mainly Barberton Mines. Group all-in sustaining costs (AISC) surged marginally to USD 1,252/oz during the six-month period ended 31 December 2020. PAF shares closed at GBX 17.30 on 4 March 2021, down by 0.57 per cent.
The ESG projects were on track for commissioning in Q3 FY21. For the financial year ending 30 June 2021, the company is well poised to deliver approximately 190,000 oz of gold, which is a substantial increase against the actual production of 179,457oz in FY20. Overall, the company has successfully demonstrated flexibility, commitment, and resilience to see through the period of uncertainty and bolster its roots for long-term growth.
- Gamma Communications Plc
FTSE AIM UK 50 Index listed Gamma Communications Plc (LON: GAMA) is a leading provider of communication services in Western Europe. Gamma is optimistic about the long-term outlook as it has been witnessing significant opportunities across its areas of interest. As a predominantly channel focused business, the company intends to continue the investment in strengthening the relationships with suppliers and enhance the capabilities to support the channel growth. It also plans to drive increased levels of digitalisation and automation across its UK Direct Business. Notably, shares of Gamma Communications have delivered an enormous return of 27.05 per cent in the past one year.
According to its recent trading update for the year ended 31 December 2020, the company’s financial performance was significantly ahead in contrast to the previous year. The company witnessed strong demand for UCaaS products, across the European and UK business markets.
In FY20, the adjusted EBITDA and adjusted EPS are expected to be marginally ahead of the range of market forecasts. In contrast, the company expects revenue to be towards the top of the range of anticipations.
Despite the Covid-19 pandemic, it has maintained its dividend policy and paid dividends of £10.4 million in 2020 to shareholders. In 2020, the company highlighted that its recurring revenue model has been robust, with bad debt remained at the low levels and acquired Exactive in the UK and GnTel in the Netherlands. GAMA shares closed at GBX 1,560.00 on 4 March 2021, up by 0.65 per cent.