Stockopoedia’s Ben Hobson identifies a diverse bunch of high-flying shares hitting a 52-week high.
One of the interesting stories from the wild volatility we’ve seen in markets this year has been the rebound of the Alternative Investment Market (AIM).
Traditionally the home of smaller, more growth-oriented shares, the FTSE AIM All Share index currently has 832 listed securities, which is roughly half the 1,694 that were on the index back in 2007.
Back then, of course, the world was on the cusp of the financial crisis. Compared to London’s main markets, which recovered relatively quickly after that collapse, it took AIM a couple of years to begin building momentum again.
Commentators generally agree that the intervening years saw a lot of weaker companies shaken out of AIM. It’s arguably a better-quality prospect overall than it was 23 years ago. This is important because it has also become an increasingly appealing option for savers looking for tax-efficient investments, as well as potentially explosive returns from growth stocks.
So, in the aftermath of the coronavirus crash we’ve been given a glimpse of how much more resilient AIM is now. Between 20 February and 23 March - the major blast zone for stocks - the AIM All Share fell by 38%, compared to 34% on the FTSE All Share. But in the weeks since then, AIM has jumped by 51% compared to just 24% on the FTSE All Share.
Past performance is not a guide to future performance
There are various reasons for the difference. One is that AIM is far less exposed to the large-cap oil and gas sector - itself a huge part of the FTSE All Share - which has been under severe pressure as a result of falling oil prices. It also benefits from almost zero exposure to the banking sector, which has also come under huge strain this year.
But AIM has also done well from the companies and sectors that it does have higher exposure to. Areas like consumer retail, small-cap gold, small-cap pharma, high-growth technology have all seen big winners and very solid returns over the past few months.
Perhaps more than ever before, AIM has proved itself to be a genuinely useful way of diversifying exposure away from main market indices - rather than just collapsing at the first sign of trouble.
To give you an idea of just how varied the best-performing stocks on AIM currently are, here is Stockopedia’s latest 52 Week High list for the index. Note that the valuations of these shares vary widely based on current price/earnings (PE) ratios. Likewise, the Stockopedia QualityRank - from 0 (poor) to 100 (excellent) - offers an idea about the financial and business quality of these shares.
As you can see, there is no shortage of shares trading close to one-year highs from a range of sectors, including the utilities firm Fulcrum Utility Services (LSE:FCRM), information group YouGov (LSE:YOU) and software business IDOX (LSE:IDOX).
|Name||Mkt Cap £m||% vs. 52w High||PE Ratio||Quality Rank||Sector|
|Fulcrum Utility Services (LSE:FCRM)||70.5||-0.78||28.7||55||Utilities|
|YouGov (LSE:YOU)||861.7||-1.23||56.4||95||Consumer Cyclicals|
|Keywords Studios (LSE:KWS)||1,342||-2.66||109||86||Technology|
|Gear4music (LSE:G4M)||81.2||-3.06||988.5||61||Consumer Cyclicals|
|Pan African Resources (LSE:PAF)||342.8||-3.66||12.1||89||Basic Materials|
|Concurrent Technologies (LSE:CNC)||87.7||-3.95||19.4||97||Technology|
Signs of improvement from UK small-caps
With markets continuing to be volatile, and the economic outlook far from clear, small-caps can be a risky option for investors. But generally, the performance of AIM during the first half of the year - with so much stress across the market - has been encouraging. There are signs that it is offering a more appealing diversification option and that improving quality is making it more resilient to turmoil.
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