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 October!
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B.P. Marsh & Partners
What it does: B.P. Marsh is a specialist private equity investor in early-stage financial services businesses.
By G A Chester. B.P. Marsh & Partners (LSE: BPM) takes minority equity stakes in selective early-stage financial services businesses. It aims to exit with a good profit further down the line. It creates value for its own shareholders principally by increasing the company’s net asset value (NAV). It has a long history of double-digit annual NAV growth.
The shares are trading at a 24% discount to NAV. The company’s also recently agreed a £51m sale of its stake in one investee company. Management will recycle much of this into new investments. But it also intends to pay shareholders a £1m special dividend, and dividends of £2m a year in 2024, 2025 and 2026. It’s earmarked a further £6m return, likely through share buybacks.
There’s a risk the sale doesn’t go through (it’s subject to regulatory approvals). Either way though, I think the AIM stock’s many years of NAV growth, and the discount shares, make for an attractive opportunity.
G A Chester does not own shares in B.P. Marsh.
SRT Marine Systems
What it does: SRT Marine Systems is a global leader in maritime domain awareness technologies, products and systems.
By Ben McPoland. SRT Marine Systems (LSE: SRT) is growing rapidly due to the ongoing global adoption of the automatic identification system (AIS). This is a tracking system that transmits a ship’s position and identity, enabling the precise monitoring of all marine traffic. SRT is a global leader in AIS systems and products.
Its customers include the United States Coast Guard and the Panama Canal. Yet the firm estimates that only about 500,000 vessels out of 26m currently have an AIS device, with thousands of the world’s ports and coast guards still to fully digitise their operations.
One risk here is the firm has been posting losses as it invests heavily in its technology. But growth last year was spectacular, with revenue rocketing 273% year on year to £30.5m. Its forward systems order book is up to £160m. And for FY 2024, brokers are forecasting 232% revenue growth (£70.9m), with a profit of £7.4m and earnings per share of 3.80p.
As I write, a current price of 47p per share equates to an attractive forward P/E ratio of 12.5 for the AIM stock.
Ben McPoland does not own shares in SRT Marine Systems.
What it does: Warpaint sells affordable branded cosmetics under the brand names of W7 and Technic to major retailers and via its own website.
By Harshil Patel. Warpaint (LSE:W7L) is growing fast. It experienced “significant” growth across all its geographical areas. For the first half of this year, it reported pretax profit of £6.2m, up 77% from £3.5m the year before.
There’s much to like about this London-based cosmetics business. First, it’s still run by its founders. Founder-led businesses are typically entrepreneurial and carefully managed, in my opinion.
Next, its affordable range of cosmetics is proving popular in a world hit by higher costs elsewhere. By owning the brand and operating a small team, Warpaint has been able to keep its cost low and pass savings to customers.
Finally, there’s ample opportunity for growth. It aims to turn its W7 and Technic products into global brands. And so far, it’s making excellent progress.
Bear in mind that the AIM stock operates in a competitive space. And it’s surrounded by much larger players that have giant marketing budgets.
That said, its nimble operation has allowed it to become a highly-profitable and cash-generating business.
Harshil Patel does not own shares in Warpaint.