Ideas for your ISA: Four AIM stock picks
Launched in 1995, AIM is a share trading platform for smaller companies that want to raise money but decide against a full market listing owing to less onerous regulations and costs. There over 1,000 companies to choose from and to help navigate investors through this potential mine field, Graham Spooner, investment research analyst at The Share Centre, picks four that investors could consider for their ISA in 2016.
“Finsbury Food is the producer of a wide range of baked goods for supermarkets, wholesalers, caterers and restaurants. This diversity reduces the risk level and gives the company exposure to potential growth in a number of key areas. The group’s strong performance of late has been mainly credited to its acquisition of bakery group Fletchers, which came through earlier than expected. Investors should also note that the prospective dividend yield of 2.5% is good for the sector and is well covered.
“Current trading is solid with good growth patterns continuing into the new financial year, particularly so in terms of organic sales. The café and convenience food service sectors have been growing steadily in recent years and Finsbury Food is a beneficiary of this growth.
“Due to the group’s recent acquisitions, diverse customer base and good relative value, this is definitely one to watch amongst its peers. Finsbury Food is however, an investment idea for those willing to accept a higher level of risk and seeking growth.”
“Engineering group Hayward Tyler is one of the world’s leading suppliers of specialist electric motors and pumps, with a growing reputation for providing mission critical products and services. The company’s products are often large and take a long time to build. A further attraction is a need for after sales maintenance and repair
“Management’s focus is on cash generation to help fund growth, improve communications between customers and suppliers and manage long term growth allied to short term output. The group have expansion plans which are geared to their markets being relatively buoyant and investors should note that its CEO is confident in the ability to win more contracts and most importantly, grow the business. This is a higher risk AIM-listed company that is establishing a niche for itself across the globe.”
“As motorists will be only too aware, spending on road repairs has hardly been top of the agenda for hard pressed local councils. In fact infrastructure spend overall has been sluggish, despite politicians recognising the part this could play in any economic recovery. Breedon Aggregates, provide various aggregates to the construction and building industry and would therefore be a direct beneficiary of increased infrastructure spending, which the group is expecting to grow strongly through to 2018.
“Breedon Aggregates has been positioning itself to benefit from such a pick-up in the economy, which has led to a number of acquisitions. These acquisitions should help expand its geographical presence in the UK and management expect a significant and improving contribution to come from the acquisitions. Since our September 2013 recommendation, investors should appreciate the share price has risen by around 130%. A strong trading update in November has helped rubber stamp our continued ‘buy’ recommendation for medium to high risk investors prepared to take a longer term view. This is a smaller AIM-listed company that is geared to a recovery in infrastructure spend.”
OPG Power Ventures
“OPG Power Ventures is a small, AIM-listed company that operates medium sized coal-fired power plants in India, and we believe it is an interesting stock choice for investors seeking growth within their portfolio. With the country’s demand for power in excess of supply, the group’s management are confident that its expanding operations will benefit from this and lead to further growth opportunities. OPG brought a number of new plants on stream in 2015, and the company has a good record for hitting its schedule. It is also looking to develop wind and solar powered plants in the future.
“Potential investors will appreciate that the group’s results continue to highlight the progress it has made over the last year. Bright prospects, including the Indian government’s desire to have reliable power as a foundation for social, industrial and economic growth, make this a choice for investors looking for growth, but also willing to accept a higher degree of risk. Since last summer the share price has fallen by around 30% providing a more attractive entry point for higher risk investors.”