The AIM shares that are up over 500% in 2021 so far

After a stellar 2020, the AIM index has lagged the FTSE 100 so far this year, but there are still plenty of shares rewarding adventurous investors with stunning gains.

The AIM market has made further progress this year, but it has lagged the Main Market, and particularly the FTSE Fledgling index, which includes companies that are too small to be included in the FTSE All-Share index. It is still making good progress, though.

AIM is 7.9% higher in the first half of 2021, which is a better performance than the measures of the larger companies on AIM. The FTSE AIM UK 50 index is 3.2% ahead so far this year and the FTSE AIM 100 index is 3.9% higher.

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That compares with an increase of 9.3% for the FTSE All-Share index and 8.9% for the FTSE 100 index. However, the FTSE Fledgling index has jumped by 22.1% in the past six months.

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The largest company in that index is Jersey Electricity (LSE:JEL), which is capitalised at £182 million. That is not high enough to even get into the AIM 100 index. There are 35 out of the 87 Fledgling index constituents, including investment companies, listed on data site SharePad that are valued at less than £50 million. If investment companies are excluded, the index has risen by 36.5%.

There are 70 companies in the Fledgling index that have risen in price this year, compared with 27 last year. This shows how much the Fledgling is catching up with AIM after underperforming last year.

The best performer this year is technical plastics supplier Carclo (LSE:CAR), where the share price has more than trebled. However, at 52p, the share price is not much more than 10% of its high back in 2012.

Many of the Fledgling index constituents are companies which have gone through tough times, and the share price rise may be significant for short-term investors, but not for long-term ones. Clothing retailer French Connection (LSE:FCCN) has risen by 84.5% this year, but its peak was in 2004 and the share price has declined by more than 95% since then.

The Fledgling is a recovery index rather than one for growth companies. That is why companies such as Smiths News (LSE:SNWS), which would be expected to be in the FTSE All-Share index, have fallen into the Fledgling index. If you are looking for recovery plays, then this is one place to focus.

Another index constituent, quantum dots developer Nanoco Group (LSE:NANO) moved from AIM to the Main Market on 1 May 2015, and the share price has fallen significantly as exploitation of its technology has taken longer than hoped.

VietNam Holding (LSE:VNH) , Centaur Media (LSE:CAU), LMS Capital (LSE:LMS), Athelney Trust (LSE:ATY) and Petra Diamonds (LSE:PDL)  were also previously on AIM. Only premium listed companies can join the Fledgling index, not standard listed ones.

Realistically, AIM is more of a combination of recovery and growth, particularly as some Main Market companies, such as HSS Hire (LSE:HSS) and Mothercare (LSE:MTC) have moved to AIM to help their recovery. Sportech (LSE:SPO) is also about to make the move.

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AIM market

The top five AIM performers so far this year are dominated by resources companies. Zephyr Energy (LSE:ZPHR) is the best with a 569% gain, although Petroneft Resources (LSE:PTR) is not far behind with a 562% increase.

Zephyr has gained approvals to start drilling a well in the Paradox Basin, Utah during July, and it has identified eight reservoirs that have adequate thickness for potential development. Oil production from the company’s interests in North Dakota commenced earlier than expected.

Russia-focused Petroneft has upgraded the output rate at the C-4 well on the Cheremshanskoye field to 320 barrels of oil per day. However, the most significant thing in the first half was probably the conversion of debt to equity, thereby improving the balance sheet.

AssetCo (LSE:ASTO) is the third-best performer and the only one not involved in resources. The share capital was halved at the end of 2020 after a tender offer at 411p a share, following the cash settlement with Grant Thornton over its auditing of the company’s past accounts. The rest of the cash is being used to build up an asset management business.

The top 50 performers have all at least doubled in 2021, while the worst 21 performers have more than halved.  

Only one of the AIM companies in the top 10 performers in 2020 has risen in the first half of this year. More than two-thirds of the worst 50 AIM performers in the first six months of 2021 were risers last year. The worst performer is Challenger Energy (LSE:CEG), which was formerly known as Bahamas Petroleum Company and has declined by 88.5% this year.

The next three companies – tidal energy supplier SIMEC Atlantis Energy (LSE:SAE), clean technologies provider Verditek (LSE:VDTK) and technology company Catenae Innovation (LSE:CTEA) - more than doubled in value last year and their share prices have slumped this year.

Covid-19 test supplier Novacyt (LSE:NCYT), the best performer last year, is the fifth-worst performer this year. Even after a 62.2% slump in the first six months of 2021, the share price has still jumped from 13p to 325.4p over an 18 month period.

Novacyt reported a move from loss to a significant profit last year. However, Novacyt a major contract with the UK government was not renewed and there is a dispute over products delivered, which may mean that some have to be replaced. A provision of £19.9 million has been made but the dispute continues. There was £91.8 million in the bank at the end of 2020, which is two-fifths of the market capitalisation. Revenues will certainly fall this year.

AIM 100

Novacyt is one of the constituents of the AIM 100, although it is the second-smallest by market capitalisation following the share price decline.

Three out of the four worst performers this year were the top three performers in 2020, while five of the 10 worst performers were in the top 10performers last year. That is because resources and fuel cell technology companies dominated last year’s performance and they have fallen back during 2021.

In the first half there are 31 companies in the index with a lower share price, plus one that is unchanged. In 2020, there were 20 companies where the share price had fallen over the year.

HutchMed (China) (LSE:HCM) has risen by 21%, but the other companies valued at more than £2 billion have hardly moved or their share price has declined – in fact, online retailer ASOS (LSE:ASC), which has the largest weighting in the index of 5.01% is 3.7% higher, which is similar to the overall increase of 3.9% for the index.  

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There are fewer obvious trends in this year’s better performers. They include kidney diagnostics company Renalytix (LSE:RENX), which recently dropped the AI at the end of its name, marketing services provider Next Fifteen Communications (LSE:NFC) and floorcoverings manufacturer Victoria (LSE:VCP).  

Looking at the sub-sectors of AIM, the two main poor performers are the resources sector, where there was a 16.6% decline in the first half and the technology sector, which fell by 2.7%.

The media sector is the best performer with a 39.1% increase, while financial services are 24.5% ahead and construction and materials is 23.4% higher. Industrials is 17.3% higher.

New admissions

Twenty-five new companies joined AIM in the first half of 2021, while another three companies switched from the Main Market to AIM. Nineteen out of the 25 new companies are trading at a premium, while one is unchanged and the other five have fallen in price.

There has been around £410 million raised by new admissions in the first six months, compared with £486.6 million raised during the whole of 2020.

There are eight potential AIM companies that have already published a Schedule One notice of their intention to join the junior market. They continue to be a wide range of companies.

Northcoders provides software training, Revolution Beauty sells beauty and personal care products, Saietta is developing an axial flux motor technology, CMO is an online building materials retailer and LungLife AI Inc develops AI-based technology to identify lung cancer cells. Most of these companies have not given an indication about how much new money they want to raise.

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There are also two Main Market companies – CML Microsystems (LSE:CML) and Sportech (LSE:SPO) - making the switch and Longboat Energy Ordinary Shares (LSE:LBE) is set to complete a reverse takeover.

While the growth of AIM has slowed, the previous outperformance seems to be attracting many more new companies than has been the case for a number of years.