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!
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What it does: Bioventix develops and supplies high-affinity monoclonal antibodies for use in clinical diagnostics
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.
What it does: Cerillion is a software business that provides billing, charging, and customer relationship management (CRM) solutions, predominantly to telecoms firms.
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.
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.