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Starting small: four Aim share picks for your Isa

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Written by: Graham Spooner, investment research analyst at The Share Centre
04/03/2015
Holding Aim shares within Isas can have some inheritance tax advantages. Here, the Share Centre gives four recommendations.

“Electronic technology company, Stadium continues to change its focus in order to become a leading provider of niche integrated electronic technologies, with capabilities to design and manufacture for specific customer needs. The two acquisitions of IGT Industries and United Wireless have supported this successfully, as has the upgrade of production facilities in the UK and Asia. The company’s objective is to gain market share through new business, whilst maintaining the level of activity in those core areas which have a mature base of established customers.

“As a small AIM company with the potential for rapid growth, this is a higher risk investment. Unlike many of its AIM contemporise it also offers a progressive dividend policy with a forecast yield for 2015 of 2.2%. After the recent rise in the share price, investors are advised to drip feed into the shares by building a holding over time.”

Optimal Payments is an online payment software specialist with products used in 200 countries by businesses and consumers. The group is attractive for investors as it has strong earnings growth and a good balance sheet, allied to the significant growth opportunity for its products in the US and around the world.

“Current trading is strong with both sales and earnings forecast to continue growing strongly over the next three years at least. The company will benefit from the strength of the US dollar, which is expected to continue due to robust economic growth and in anticipation of a return to rising interest rates. The US is key for the company, as three states have liberalised online gambling recently and there are hopes California and Pennsylvania may follow soon. A further boost could come if PokerStars, the largest online poker platform, receives approval for a New Jersey licence in 2015.”

Iomart has been involved in cloud computing since before cloud computing became fashionable. This industry is expected to grow fairly rapidly as technology and consumer habits online continue to evolve. As one of the longest established in its sector and a leader in the UK, Iomart offers investors an attractive way to gain exposure to this market.

“The company offers global diversifications as it owns eight data centres spread out across the UK, six in the US and one in Dubai and Singapore. It has partnerships with some of the largest computing businesses in the world such as Microsoft and Dell, and is operationally geared so it can take more business for relatively little cost. Investors should note that Iomart’s management turned down a takeover approach recently however, we believe it still remains a potential takeover target.

“Despite a fall in the share price due to first half revenues and adjustable profit being short of market expectations, we still believe in the company’s longer term growth prospect. The fall in share price should be viewed as an attractive entry point for investors looking for capital appreciation and willing to accept a higher level of risk.”

OPG Power Ventures operate small and medium size coal-fired power plants. Demand for power in India will be in excess of supply and as a result management are confident that its expanding operations will benefit, making this a potential opportunity for investors seeking exposure to this market. The result of the Indian election in 2014 gave the market a boost, and if the new government can deliver on some of its aims for reliable power as a foundation of the country, then OPG could be a beneficiary.

“Its plants are located near to ports and can burn a variety of coal. New energy plants are set to come on stream in 2015 and the company has a good record for hitting its schedule. Results continue to highlight the progress the group has made over the last year and significant growth in profits is predicted by 2016 – as well as dividends. Having fallen from its November high, the current share price provides a more attractive entry point for high risk investors seeking to benefit from the demand for power in India.”

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