The Motley Fool

I’d avoid Marks & Spencer shares and buy this AIM growth share instead

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Chart displaying growth
Image source: Getty Images.

Once again, Marks & Spencer has let down investors. I wouldn’t be keen to invest in the supermarket, as it tries to turn around its ailing clothing division. Whereas there are a good number of AIM growth shares that have far more potential to increase their shares prices and dividends.

A growth share with plenty of potential to outperform Marks & Spencer shares

In my view, one such share is Polar Capital Holdings (LSE: POLR). The boutique asset manager has a dividend yield of 4.8%, which is very solid for an AIM-listed company. It’s established and has a value approaching £700m, so this isn’t one of the AIM’s Wild West-style penny shares.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Many of its funds have been performing very well for investors, including the Polar Capital Technology Trust.

Growth is both organic and through acquisition. As part of its acquisitive growth strategy, Polar Capital bought Dalton Capital, the parent company of London-based boutique asset manager Dalton, for £15.6m in December. The latter has £1.24bn of assets under management and a strong European presence.

In its last annual report, the company stated it was keen to expand in the US and has bought financial companies over the Atlantic to help achieve this. Along with expansion in other regions like Asia and the Nordics I think there’s a lot more growth to come from Polar Capital Holdings.

An AIM share in a growth industry – gaming

Gaming group Frontier Developments (LSE: FDEV) is part of a red hot sector. Under lockdowns in 2020 shares in companies in the sector flew. Many are now expensive on traditional valuation measures like the price-to-earnings (P/E) ratio, but if they can post exceptional growth there may still be opportunities for the share prices to rise.

I might consider Frontier Developments as a future buy for my portfolio since I have confidence in the sector and am not averse to buying a highly rated stock. There’s little doubt it’s a very solid operator.

It has plenty of cash and a strong balance sheet. The games are very popular and of high quality, and include titles such as Zoo Tycoon and Disneyland Adventures.

With the global gaming market forecast to grow from $151.55bn in 2019 to $256.97bn by 2025.

I think investor optimism and interest in the sector will keep pushing share prices higher. The quality of Frontier Development’s games means I believe it’ll stay near the front of the pack. It’s such a good company that it may even get taken over. Codemasters, a rival game producer has recently been bought, so there’s precedent. 

I like both Polar Capital and Frontier Developments because they look to be high quality AIM growth shares. The former is particularly attractive because it’s valuation is lower and it pays a dividend. The latter is in a sector that is in fashion and could well remain so for some time. I expect both to massively outperform floundering Marks & Spencer shares. 

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Andy Ross owns shares in Polar Capital Holdings. The Motley Fool UK has recommended Frontier Developments and Polar Capital Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.