Best AIM stocks to buy in July

We asked our writers to share their best AIM-listed stocks to buy for July, including a 2020 Hidden Winners recommendation!

| More on:

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.

Chalkboard representation of risk versus reward on a pair of scales

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

We asked our freelance writers to share their top ideas for stocks listed on the Alternative Investment Market (AIM) to buy with investors — here’s what they said for July!

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Bioventix

What it does: Bioventix develops and supplies high-affinity monoclonal antibodies for use in clinical diagnostics

By Paul Summers: AIM isn’t known for being overburdened with quality companies. However, one clear example is Bioventix (LSE: BVXP). 

This biotech firm consistently generates astonishing margins. In fact, Bioventix is arguably one of the best companies in the UK based on this metric.

Recent trading has been reassuringly solid too. Pre-tax profit jumped 27% to £4.5m in its last set of interim results.

Throw in a rock-solid balance sheet and an enviable position in its niche market and there’s a lot to like.

Unfortunately, the shares currently change hands for almost 26 times forecast earnings. That’s fairly rich even when investor sentiment is high, let alone during a period of economic strife.

This could prove problematic if, for whatever reason, the firm issues a less-than-encouraging update.

Then again, you tend to get what you pay for. I doubt Bioventix stock will ever be available for a bargain-basement price.

Paul Summers has no position in Bioventix.

Cerillion

What it does: Cerillion is a software business that provides billing, charging, and customer relationship management (CRM) solutions, predominantly to telecoms firms.

By Edward Sheldon, CFA. There are three main reasons I’ve selected Cerillion (LSE: CER) as my top AIM stock this month.

The first is that the company has a lot of momentum right now. For the six-month period to the end of March, it posted revenue of £20.5m, up 27% year on year, and adjusted earnings per share of 25.5p, up 37%.

The second is that the company just raised its interim dividend by a whopping 27% to 3.3p per share. This suggests to me that management is very confident about the future.

The third reason is that it has positive share price momentum. This is a stock that is in a very strong uptrend right now. I’d much rather buy a stock that is trending up than one that’s trending down.

Now, it’s worth noting that Cerillion does have a high valuation. Currently, the forward-looking P/E ratio here is in the low 30s. I’m comfortable with the valuation given the strong growth here. However, it does add some risk.

Edward Sheldon owns shares in Cerillion.

Creo Medical  

What it does: Creo Medical is a medial devices company that manufactures instruments used in endoscopic surgery.   

By Ben McPoland. Creo Medical (LSE: CREO) is an intriguing AIM stock. Its flagship Speedboat Inject product is a multimodal instrument designed for flexible endoscopy. Instead of being just a long, camera-mounted tube looking inside a patient’s body, this product is more like a high-tech Swiss army knife. It can dissect, cut out, inject and coagulate all in a single device.

This makes procedures far less invasive, potentially turning hospital stays into routine one-day visits. Indeed, Creo estimates that its Speedboat device saves the NHS £5,000 per procedure. More clinicians around the globe are now being trained on its suite of electrosurgical products.

Furthermore, its instruments are powered by an advanced – and patented – energy system. And it is already licensing its technology out to other firms, including robotics giant Intuitive Surgical

The company recently raised over £33m to fund its growth, and management expects this will be sufficient to reach positive cash flow by 2025.

Though there’s a risk that doesn’t happen, I’m backing Creo to become a much larger company.

Ben McPoland owns shares in Creo Medical and Intuitive Surgical.

Michelmersh Brick Holdings

What it does: Michelmersh is a premium brick manufacturer that owns brands including Blockleys, Carlton and Hathern Terra Cotta.

By Roland Head. My top AIM stock right now is Michelmersh Brick Holdings (LSE: MBH). Shares in this specialist firm have fallen by a third from their 2021 highs. I think they look excellent value on a medium-term view.

The main risk facing the business is that the housing slump will be more severe than expected, perhaps alongside a UK recession. A wider construction downturn could also be problematic.

Michelmersh’s valuation could become more depressed in this scenario. But I think the company’s portfolio of distinctive brands and £10m net cash balance mean that it will ride out any short-term headwinds and return to profitable growth.

I’m also reassured by the combined 28% shareholding of co-founders Eric Gadsden and Martin Warner, who remains chairman.

The stock currently trades on around nine time forecast earnings with a 4% dividend yield. If I didn’t already own shares in a housebuilder, I’d be buying at this level.

Roland Head does not own shares in Michelmersh Brick Holdings.

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.

The Motley Fool UK has recommended Bioventix Plc, Cerillion Plc, and Intuitive Surgical. 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.

More on Investing Articles

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

£20,000 in savings? Here’s how I’d aim for £14,710 a year in passive income

With spare savings, this Fool would start generating passive income for a more comfortable retirement. Here he details how he'd…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

£9,000 in savings? Here’s how I’d try to turn that into £581 a month of passive income

Relatively small investments in high-yielding stocks can grow through the power of dividend compounding into significant passive income.

Read more »

Photo of a man going through financial problems
Investing Articles

These are the FTSE’s biggest dogs over the last year!

The FTSE 100 has fallen far behind other major market indices over the past 12 months. However, these three sliding…

Read more »

Investing Articles

My top 3 stock market lessons from the Nvidia volcano eruption

Can we learn anything from the explosive rise in Nvidia's share price? Here are three Foolish reflections from this stock…

Read more »

Abstract 3d arrows with rocket
Investing Articles

Is boohoo the best near-penny stock to buy today?

This Fool asks why the boohoo share price has collapsed and whether now might be a good time to invest…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

A brilliantly reliable FTSE 100 share I plan to never sell!

This FTSE-quoted share has raised dividends for more than 30 years on the spin! Here's why I plan to hold…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing Articles

This 7.7% yielding FTSE 250 stock is up 24% in a year! Have I missed the boat?

When a stock surges, sometimes it can be too late to buy shares and capitalise. Is that the case with…

Read more »

Investing Articles

£13,200 invested in this defensive stock bags me £1K of passive income!

Building a passive income stream is possible and this Fool breaks down one investment in a single stock that could…

Read more »