What are the biggest AIM stocks to watch in 2022?
AIM (acronym for alternative investment market) is the most successful growth market in the world that offers traders and investors some unique opportunities. Discover the top AIM stocks to watch and how to take a position.
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Cerillion is a software company that provides billing, charging and customer relationship management solutions for businesses. Gaining momentum with full-year results for 30 September 2021, the company’s revenue was up 25% (£26.1 million) while adjusted earnings per share were up 105%.
The group also won a number of major new contracts, and it has a record back-order book and strong new business in the pipeline.1 The company’s financials also look very solid; debt is low while return on capital employed (ROCE) is upwardly trending.
Keystone Law is an innovative firm that operates a platform where lawyers can work remotely, making it well placed to benefit from UK’s economic recovery. There’s significant long-term growth potential as the company is not constrained by office space and can appeal to lawyers across the country post-Covid-19.
Over the past five years, revenue has climbed 163% while ROCE has averaged 26%.2 This good AIM stock for two reasons: higher levels of economic activity typically lead to higher demand for legal services and, as a platform business, the long-term growth potential is significant.
Unlike traditional legal firms, the firm is not constrained by office space. Its work-from-anywhere business model is very appealing to lawyers across the country post-Covid-19.
Alpha is a leading provider of foreign exchange (FX) hedging services, offering payment solutions for businesses, therefore potentially benefitting from economic recovery.
According to a recent trading update, the company had remained ‘strong’ as for year-end (31 December 2021) AFX’s revenue increased by 68% on the previous year to £77.5 million with strong growth across all divisions.3 AFX is also ‘founder led’ where research has shown that these companies prove to be good long-term investments.
Growth is also good for Alpha; between 2015 and 2020, revenue climbed from £5.1 million to £46 million. AFX posted a total revenue of £77.5 million in 2021.
Calnex is one of the leading providers of testing and measurement services to the telecommunications industry. The company is at the forefront of fifth generation of network technology (5G).
With huge transformation in the telecoms industry, 5G is the key to exciting new tech such as self-driving cars and remote surgery. These new technologies will likely create a high demand for network testing services in future.
In addition to a solid set of results for the period to 30 September 2021, Calnex reported a 23% growth in total revenue for 2021. It continues to capitalise on the global telecom industry’s transition to 5G and the growth of cloud computing.
The company chief executive officer (CEO) declared that it continues to capitalise on the global telecom industry’s transition to 5G and the growth of cloud computing.
A leading provider of business communications solutions, Gamma’s commitment to ‘unified communications’ has experienced strong growth.
Gamma posted positive results for 2021 with revenue of £447.7 million, up from £393.8 million on the previous year, which was driven by new product launches and a full year of trading in Europe.4 With a gross margin of 51%, it enjoyed a gross profit of £228.5 million for the year ended 31 December 2021.
According to Grand View Research, the industry will grow by about 21% per year between now and 2028, which is good news for Gamma’s continued growth. The risk-reward skew here is attractive especially for long-term investors.
20 largest AIM stocks by market cap
|Company||Market cap as of 4 August 2022|
|Abcam PLC||£2.87 billion|
|Keywords Studios||£2.08 billion|
|Burford Capital Ltd||£1.99 billion|
|Hutchmed (China)||£1.70 billion|
|Gb Group||£1.29 billion|
|Cvs Group||£1.26 billion|
|Itm Power||£1.25 billion|
|Smart Metering Systems||£1.23 billion|
|FEVERTREE Drinksq||£1.20 billion|
|Emis Group||£1.18 billion|
|Greencoat Renewables||€1.15 billion|
|Ceres Power||£1.12 billion|
|Breedon Group||£1.10 billion|
|Learning Technologies Group||£1.08 billion|
|Gamma Communications||£1.07 billion|
|Next Fifteen Communications||£1.02 billion|
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Why do companies list on AIM?
The main reason businesses choose to go public on AIM is because they need capital to grow, and sourcing other finance can be difficult. AIM is designed for small- and medium-sized businesses that wish to list their company on a stock exchange but are not yet ready for a full traditional listing.
AIM has proven its ability to provide the vital funding needed to nurture small businesses. The majority of funds raised on AIM is by companies that have already listed, demonstrating that firms can tap into vital liquidity even after an IPO.
It also brings companies under a recognised regulatory and compliance framework that sets the standards for listed companies, which gives them higher recognition among investors and important institutions like banks and foreign lenders.
Despite strict regulations, this exchange is designed to make it less complicated for new businesses to float on AIM. That’s because it doesn’t require a business to be a certain size (as is the case traditional exchanges). Instead, AIM requires a company to have a three-year operating history and the ability to demonstrate its worth.
Are AIM stocks a good investment?
In a nutshell, AIM stocks offer high risk and high reward investments. The attractiveness of this market is the ability to invest in early-stage ventures to help them build their value, ultimately increasing the size of your investment in the long term.
However, share prices can move by double digit percentages in a single day – so it’s important to take steps to manage your risk when trading or investing in AIM stocks.
Many highly successful companies and widely recognised names became public by listing on AIM before listing on a bigger exchange. These include the Domino's Pizza Group, insurance provider Hiscox, self-storage firm Big Yellow Group and bookmaker GVC Holdings, to name a few.
Now that you’ve learnt about the top AIM stocks to trade or invest, you can test your skills before trading or investing on the live markets by opening a demo account with us.
We’ll give you £10,000 virtual funds that you can use to practise and build your confidence in a risk-free environment.
1 Investegate, 2022
2 The Motley Fool, 2022
3 Fxnewsgroup, 2022
4 Gamma Communications PLC, 2022
5 Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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