3 AIM shares that are worth a look right now

AIM shares can provide strong returns over the long term. Here, Edward Sheldon highlights three he likes the look of right now.

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London Stock Exchange’s Alternative Investment Market (AIM) can be a great place to find growth stocks. In this area of the UK stock market, there are many high-growth businesses.

Here, I’m going to highlight three AIM shares that appear to have a lot of potential. I think these stocks are worth a closer look right now.

Ergomed

First up is Ergomed (LSE: ERGO). It’s an under-the-radar company that provides specialised services to the pharmaceutical industry. Founded in 1997, it operates in over 100 countries worldwide, serving some of the pharma industry’s biggest players.

A recent trading update showed that this business is performing pretty well at present. For 2022, the company generated revenue of £145.3m, up 22.5% year on year.

Meanwhile, the group said it started 2023 with a positive outlook. It noted that its order book growth provides strong revenue visibility.

We are confident in our future as a leading global provider of specialist pharmaceutical services underpinned by market-leading technology, and look forward enthusiastically to the coming year.

Ergomed management

Recently, Ergomed’s share price has experienced a bit of a pullback. I think this has thrown up a potential buying opportunity. The shares still aren’t super cheap (the P/E ratio is about 25). However, the risk/reward proposition here is now quite attractive, in my view.

Keystone Law

Keystone Law (LSE: KEYS) is the next AIM stock I want to highlight. It’s an innovative law firm that operates a scalable platform model.

Keystone shares have taken a huge hit recently on the back of recession fears. It seems investors are worried that an economic downturn will reduce demand for the company’s services.

A recession is a risk here, of course. However, the recent share price fall seems excessive, to my mind.

In a trading update last month, the company said the favourable market conditions reported in H1 FY2023 continued through H2 (the six-month period to 31 January), as client demand remained “robust”, resulting in another “strong performance”.

The company added it expected both revenue and adjusted profit before tax for FY2023 to be marginally ahead of market expectations.

Keystone Law shares currently trade on a P/E ratio of about 24. I think that’s quite reasonable, given the company’s growth potential.

Calnex Solutions

Finally, check out Calnex Solutions (LSE: CLX). It provides testing and measurement services to the telecoms industry.

This is an AIM stock I’m very bullish on. In the years ahead, the rollout of 5G networks (and the emergence of new technologies such as self-driving cars) is going to create high demand for test and measurement services that help companies prove that new systems operate effectively and conform to rigorous international standards.

As a leader in this space, Calnex is well positioned for strong growth. It’s worth noting that for the six months to 30 September 2022, revenue was up 38% year on year.

Looking beyond the growth potential here, one thing I like about Calnex is the fact that the company is led by founder Tommy Cook. Research shows that founder-led businesses often turn out to be good long-term investments.

This is another stock that isn’t particularly cheap. Currently, the forward-looking P/E ratio is about 26. The valuation risk doesn’t put me off however. I see huge potential here.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon has positions in Calnex Solutions Plc and Keystone Law Group Plc. The Motley Fool UK has recommended Ergomed Plc. 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.

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