Five AIM share tips for 2025: big profits and a takeover

As ever, there was a mixed first-half performance by the five AIM recommendations for 2025. One has already been taken over at a profit, while two others have made good gains. Unfortunately, there is one where the share price has more than halved, although there is potential for recovery.

Despite the lone big loser, there was still an overall average gain for the five shares of 9.3% over the six months, which compares with a 7.1% gain for AIM and 7.2% for the FTSE 100 index.

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Kinovo

Recommendation price: 64p

Bid price: 87.5p.

Kinovo (LSE:KINO) had been turned around by its management and legacy issues were almost sorted out. That is a vulnerable time for a company. The share price does not reflect the progress made and a bidder can make a move at much lower risk than before. This is what happened to Kinovo.

Former AIM company Sureserve, which was itself acquired by private equity buyer Cap10 Partners two years ago, took the chance to offer 87.5p/share in cash, which valued Kinovo at £56.4 million.

Kinovo provides electrical, gas and building maintenance and compliance services to local authorities and housing associations. Sureserve provides compliance and energy efficiency services to a similar customer base.  

Kinovo is focused on south east England and Sureserve wants to expand the electrical activities into other regions.

The AIM quotation was cancelled on 2 July following the bid becoming effective. The bid was not generous, particularly as Kinovo should become highly cash generative, but it was attractive to investors because of the short-term gain.

Gooch & Housego

Recommendation price: 505.5p

Current price: 641p

Optical components and systems manufacturer Gooch & Housego (LSE:GHH) continues to raise margins, and the performance of the aerospace and defence division is improving. Trading in some of the industrial and life sciences markets remains difficult, but the long-term outlook is positive.

In the six months to March 2025, revenues were 11% higher at £70.9 million, while pre-tax profit improved from £2.6 million to £5.1 million. The aerospace and defence division returned to profit in the first half.

Acquisitions have been focused on the defence sector. Phoenix Optical made its maiden contribution in the first half. The recent acquisition of Global Photonics will increase the scale of the business and provide access to additional large defence contractors and equipment manufacturers.

Industrial is still the biggest contributor of revenues and profit. The semiconductors market remains weak, although the spread of activities helps to offset weakness in some markets.

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Net debt increased to £24.1 million after the purchase of Phoenix Optical. The Global Photonics acquisition subsequently cost $17.5 million (£12.8 million). Debt levels will fall if there are no more acquisitions, but that does not appear likely.

The order book has improved to £121.5 million. There is 95% coverage of the forecast revenues for the second half. A recovery in full year pre-tax profit from £8.1 million to £13.4 million is predicted. This could rise to £16.6 million in 2025-26. The prospective 2024-25 multiple is 17, falling to 14 next year.

The shares have gone ex-dividend for the interim payout of 4.9p/share. The improved share price better reflects the value of the business, but there is still potential for significant long-term growth, so the shares are still attractive.

Lords Group Trading

Recommendation price: 33.5p

Current price: 46.5p

Builders’ and plumbing merchant business Lords Group Trading (LSE:LORD) appears to be over the worst when it comes to trading and the acquisition of an online rival puts it in a stronger market position.

A poor trading statement early in the year led to the 2024 pre-tax profit forecast being slashed from £6.4 million. The outcome for 2024 was pre-tax profit of £3.8 million on revenues of £436.7 million, down from £462.6 million in 2023. The main decline came from the plumbing and heating division because of the weak boiler market.

Lords Group Trading has acquired the business and assets of former AIM company CMO after it went into administration. This will significantly increase the online presence of the group. It is paying £1.8 million for £1.2 million of property assets and nine specialist websites that focus on specific sectors of the building market. These generated revenues of £52 million in 2024, but it is difficult to assess what the contribution will be under new ownership.   

This year’s forecast has not been adjusted for the CMO acquisition. Cavendish assumes that the CMO operations should be able to breakeven. A 2025 pre-tax profit of £6.7 million is forecast, but this includes property disposal gains. They will cut net debt from £32.4 million to below £20 million by the end of 2025.

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Management is confident that it can meet the current forecasts following a strong first quarter, partly due to delayed heating orders. New branches are performing better than anticipated.  

The shares have gone ex-dividend for the final payout of 0.52p/share. The share price had fallen to 24.5p in April, so there has been a sharp rebound since then. The prospective 2025 multiple is currently 17, with the potential for outperformance if the CMO business does well and scope for further recovery in the medium term. Buy,

TPXimpact

Recommendation price: 43p

Current price: 21p

Digital transformation services provider TPXimpact Holdings Ordinary Shares (LSE:TPX) revealed that third-quarter trading was in line with expectations, but contract starts were delayed and slow to build up which will hit the fourth quarter. That lead to a forecast downgrade in the spring. This is due to the UK government putting off spending decisions.

The UK government comprehensive spending review has been completed, but it is likely to take time for things to settle down and tendering for contracts to get going. TPXimpact is winning new business, but not big headline contracts. Potential opportunities should start to come through before the end of the year. The use of contract workers has reduced and there is scope to increase capacity if contracts are won.  

The 2024-25 pre-tax profit of £3.3 million was slightly lower than the forecast, but up from £1.8 million the previous year. Like-for-like revenues fell 8% to £77.3 million. The profit improvement came through gross margins rising from 25.1% to 28.6% and lower overheads. Net debt was £8.5 million at the end of March 2025.

This year, revenues are expected to improve to £80 million, while further margin improvement could take pre-tax profit to £4.85 million. That puts the shares on six times prospective earnings, indicating investor caution about prospects. Net debt could fall to £7.6 million by March 2026.

Government will want to invest in digitising services as a way of keeping down costs. The timing of the spending remains uncertain, though. Positive news in the second half would help the share price to bounce back.  

EMV Capital

Recommendation price: 48.1p

Current price: 46p

Technology company adviser and investor EMV Capital (LSE:EMVC)has built up a portfolio of investments with small initial cash investments. Advisory and other fees are building up, so that they can eventually cover overheads. 

In 2024, core revenues increased from £1.4 million to £2.5 million following the acquisition of Martlet Capital. The underlying loss by the core investment business rose from £1.1 million to £1.5 million due to additional costs after the acquisition. Last year, assets under management rose by one-third to £98.5 million.  

The reported consolidated figures also include revenues from majority-owned investee companies, which are loss-making. That means that the overall loss was £3.74 million.

There are direct and indirect interests in more than 70 companies. The Martlet acquisition also provides additional direct investment opportunities, such as sustainable plastic developer Xampla.

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There was £1 million in cash at the end of 2024 and net assets were £14 million, compared with a market capitalisation of £12.8 million. The decline in the Nasdaq-listed PDS Biotechnology share price knocked the net asset value (NAV).

Following the 2024 results, chief executive Dr Ilian Iliev and executive director Ed Hooper bought 24,516 shares at 40.74p each and 28,000 shares at an average share price of 38.381p each, respectively. There has been a share price recovery since then, but it remains lower than at the start of the year.

EMV Capital continues to raise cash from investors for its own investments and other companies. The more mature investments could provide some potential for realising cash proceeds. Panmure Liberum has cut its target share price to 133p, but that is still well above the current share price. The timing of any share price improvement is difficult to gauge, but EMV Capital has a portfolio of healthcare, renewable and technology investments that will become more valuable. Long-term buy.

2025 AIM recommendations

Source: ShareScope. Prices on 30 June. *Bid price.

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