Interactive Investor

AIM share tips review 2023: two big winners and hope for the rest

Small companies have been out of favour since interest rates began to rise in late 2021, but Andrew Hore had some success this year. Here are the final results and what he thinks of the five stocks now.

22nd December 2023 10:15

by Andrew Hore from interactive investor

Share on

Man celebrating with a dance 600

It was a poor performance for my 2023 AIM recommendations, although they did slightly better than AIM itself. One laggard dragged down the overall performance, but only two of the five companies ended the year with a positive return.

The average decline of the five tips was around 8%. Because four out of the five companies were dividend payers, adding the income back helps to reduce the negative total return by nearly three percentage points.

ActiveOps (AOM)



Management process automation software provider ActiveOps (LSE:AOM) did not manage to hang on to all the share price gains made in the first half, but the business has made good progress. ActiveOps is cash generative and is building up a valuable recurring revenues base. Its investment in artificial intelligence (AI) will help to automate more processes and provide further opportunities for clients to reduce their cost base. That is important at times like these.

In the six months to September 2023, revenue improved from £12.3 million to £13.1 million and gross margin moved ahead to 84% due to greater SaaS (software as a service) revenues. ActiveOps managed to move from a loss to a small profit. Net revenue retention remains above 100% and annualised recurring revenue reached £23.7 million.

A pre-tax profit of £580,000 is forecast for 2023-24, rising to £1.26 million the following year. There is little in the way of capitalised spending, so the profit should be turned into cash. 

Cash is forecast to reach £16.5 million by the end of March 2024. That underpins one-quarter of the current market capitalisation. ActiveOps can continue to grow as an independent company but, given the recent spate of software and technology company bids, it could also be a bid target if the share price stays at these levels.

Renew Holdings (RNWH)



Engineering services provider Renew Holdings (LSE:RNWH) proved to be the most consistent of the five companies. The spread of maintenance-based activities for sectors, such as water, nuclear, rail and highways, has proved as resilient as expected as the government focuses on this form of infrastructure investment. The general downturn in the construction sector has not hampered progress because of the lack of exposure to large, new projects.

In the year to September 2023, revenue was 13% ahead at £960.9 million, although the operating margin declined. Underlying pre-tax profit improved from £58.3 million to £62.8 million, which included a £3.9 million contribution from other operating income. The dividend was raised from 17p/share to 18p/share.

Ensica, which provides services in the water sector, made an initial contribution in the period. Nuclear manufacturing and fabrication company TIS Cumbria was acquired after the year end for £4.7 million.

The order book is worth £860 million and that covers multiple years. The water sector is set to be a significant contributor in the coming decade. Pre-tax profit is forecast to rise to £66 million this year, which equates to 13 times prospective earnings, while the forecast yield is 2.3%.

Net cash was £35.7 million at the end of September 2023. Renew Holdings tends to spend its cash on acquisitions, but if it did not, then the cash pile could be in excess of £100 million within three years. Renew Holdings should continue to be a steady performer, making it an attractive long-term investment.

DSW Capital (DSW)



Professional services network operator DSW Capital (LSE:DSW) had warned early in the year that it would fall short of expectations due to much lower M&A activity. The share price slumped in the first half, and it continued to fall in the rest of the year even though trading statements have been more reassuring.

M&A activity continues to be weak, but there are signs of improvement, while new teams have been added in business recovery and tax advice to broaden the income base. A new financial adviser has also replaced the one that departed last year, but it will take time to rebuild the client base in this area. The strong balance sheet with cash of £2.8 million even after start-up loans to network participants means that short term volatility is not a concern.

The underlying interim pre-tax profit fell from £900,000 to £200,000, but that should mark the low point, with a much better second half expected. Shore Capital believes that pre-tax profit could fall from £1.4 million to £1.2 million this year before recovering to £1.6 million next year, which would put the shares on around nine times prospective 2024-25 earnings.

DSW Capital reduced its interim dividend to 1.25p/share to rebalance the payments, but the total dividend for the year will be maintained at 3.76p/share, even though it will only be covered 1.1 times by forecast earnings.

M&A still accounts for two-thirds of group income, but this proportion should reduce as other parts of the business scale up. The operational gearing of the company was shown through the effect of a downturn in income on the profit. Profit could recover rapidly if there is positive momentum. Hold on for the share price recovery and the 7.5% yield.

2023 AIM recommendations


Tip price (p)

Current price (p)

% change

% change in July






DSW Capital





Duke Royalty










Renew Holdings








AIM All Share



FTSE 100



Source: SharePad. Prices on 18 December 2023. Dividends not included.

lok store self storage 600

Lok’nStore (LOK)



Self-storage sites operator Lok'n Store Group (LSE:LOK) shares were hit by the fundraising at 765p/share during the summer and to some extent the higher interest rates holding back property valuations. The share price slumped well below that price for a time, although it has recovered.

Management took the decision to ask for cash from shareholders even though it had an abundance of spare debt facilities. That was due to the rising interest rates, and it was deemed wise to be cautious about increasing debt by too much.

Lok’nStore still has a significant pipeline of new stores, which will add 39% to capacity. There are 11 planned stores – eight freehold, one leasehold and two managed.  

Growth in full-year revenue was modest and they reached £27.1 million - the sale of sites last year and one-off fees had boosted comparatives. Occupancy in stores operating for more than three years is 80.6%, while pricing has risen by 6.8%. Profit declined, but there was still £13.9 million of cash generated from operating activities. The total dividend was raised 10% to 19p/share. That is 12 years of consecutive increases.

Lok’nStore increased its net asset value (NAV) by 1% to 986p/share at the end of July 2023. Net debt was £12.3 million, leaving plenty of room in the existing bank facilities to fund additional openings. However, it could get near to £40 million by next July.

NAV could rise to 1,021p/share by July 2024, and it could improve further even without any reduction in interest rates because of the rolling out of new sites. The discount to NAV of around one-fifth is unwarranted. This is certainly a long-term holding.

Duke Royalty Ltd (DUKE)



Duke Royalty Ltd (LSE:DUKE) had a steady year, with one exit that happened within a matter of months of the initial investment. That is not the idea of royalty investment, but it did provide an excellent short-term return. The investment in data centre services provider Instor Solutions generated cash of $11.2 million (£8.8 million). The initial investment was in March 2023 and the gain $2.4 million.

Despite the progress, the share price dipped over the year. Even taking account of 2.8p/share of dividend payments in the past year, there was still a small net decline.

In the six months to September 2023, recurring cash revenues were £12.2 million. There have been 12 consecutive quarters of growth. Total interim revenues were 35% higher at £14.1 million – the main difference was the Instor exit.

During the period, Duke Royalty made one of its biggest initial investments in glass architectural products supplier Glasshouse Products. The $11.5 million investment is backing a member of the original founding family buying back the business. There are 15 ongoing investments and bank facilities provide £40 million more to invest. Management is cautious and it always makes sure that an investee company can make the royalty payments. The royalty offer remains competitive.

Net asset value of 39.7p/share is forecast for March 2024. There should be a steady increase in NAV with the current portfolio and potential for additions, while still paying at least a maintained dividend. The discount to NAV and the yield of 8.6% on a maintained dividend mean that the shares are still attractive.

Andrew Hore is a freelance contributor and not a direct employee of interactive investor.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.


We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.

Please note that our article on this investment should not be considered to be a regular publication.

Details of all recommendations issued by ii during the previous 12-month period can be found here.

ii adheres to a strict code of conduct.  Contributors may hold shares or have other interests in companies included in these portfolios, which could create a conflict of interests. Contributors intending to write about any financial instruments in which they have an interest are required to disclose such interest to ii and in the article itself. ii will at all times consider whether such interest impairs the objectivity of the recommendation.

In addition, individuals involved in the production of investment articles are subject to a personal account dealing restriction, which prevents them from placing a transaction in the specified instrument(s) for a period before and for five working days after such publication. This is to avoid personal interests conflicting with the interests of the recipients of those investment articles.

Related Categories

    AIM & small cap sharesTrading tips and ideasUK shares

Get more news and expert articles direct to your inbox