Polarean, Velocys & Serica: Should you buy these 3 AIM stocks?

Highlights 

• AIM-listed stocks attract a lot of investors as they believe these stocks will outperform and deliver high returns.
• Polarean Imaging Plc, Serica Energy Plc, Velocys Plc are three AIM stocks in focus.

Investors follow multiple investment strategies to generate an alpha return for their portfolios. Some investors invest in value stocks with strong fundamentals, while others prefer growth stocks, investing in small companies which are currently in the early stages of the businesses cycle. There are many such investment strategies available in the stock market that assist investors in getting a higher return on investment.

Similarly, investors also select market segment as their investment strategy, and on the London Stock Exchange (LSE), the one that attracts a lot of investors attention is the AIM index, which constituent smaller companies with low market cap, currently in the growth stage of their business cycle.

Investors are attracted to AIM-listed stocks as they believe these stocks will outperform and deliver high returns. However, not all AIM-listed stocks perform in a similar manner, and some risky stocks can also erode investor’s wealth. Therefore, investors need to select the right companies with strong fundamentals and good management and hold their investment for the long term.

Let us look at 3 AIM-listed stocks that have been buzzing off late:

Polarean Imaging Plc (LON:POLX)

The medical-imaging technology company offers drug-device combinations to achieve high resolution magnetic resonance imaging (MRI) which is used in the treatment of pulmonary diseases.

The company’s product was recently submitted for the US Food and Drug Administration (FDA) approval, which was rejected in its present form, and the US FDA has provided a list of technical or manufacturing-related issues, which the company plans to correct and will be resubmitting its New Drug Application (NDA). After resubmission, the US FDA might take 2-6 months to complete its complete review. The news disappointed the investors, and the stocks suffered a massive rout of around 60% on 6 October 2021.

Polarean Imaging Plc currently trades at GBX 44, up by 2.80% on 7 October 2021 at 8:40 am GMT+1 with a market cap of £89.48 million.

Velocys Plc (LON:VLS)

The company is engaged in the generation of low carbon transport fuel using its proprietary Fischer-Tropsch technology. It generates energy from residual woody biomass and solid waste and two developing projects in the US and the United Kingdom.

The company operates in the alternative energy sector, an underpenetrated market with lot of potential. The company reported revenue of £8.2 million (HY2020: £0.2m) during the first half of 2021, while its gross profit was at £3.3 million (HY2020: £0.1m). Licensing fees and sales of reactors and catalysts were the major revenue contributor.

The company has a positive outlook for upcoming quarters as demand for sustainable fuel is increasing, supported by the change in global policy.

Velocys Plc currently trades at GBX 5.20, up by 1.92% on 7 October 2021 at 8:40 am GMT+1 with a market cap of £55.42 million.

Serica Energy Plc (LON: SQZ)

The company operates as an independent oil and gas exploration company with its key projects located in the Northern and Central North Sea.

The company reported a significant revival in revenue in the first half of 2021, mainly due to higher crude oil and gas prices in the international market, which helped the company sell its inventory at higher prices. As a result, it reported revenue of £63.8 million, while its gross profit was at £46.0 million. Average daily production during the first half was at 18,900 boe, which is expected to increase further following the start of new production from Rhum R3 and Columbus site.

Serica Energy Plc currently trades at GBX 214, down by 7.76% on 7 October 2021 at 8:40 am GMT+1 with a market cap of £622.3 million.