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I think these AIM shares could be hidden gems with huge growth potential

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In a market where dividends have become much rarer and tech has been leading the stock market recovery, I like the look of these lesser known growth AIM shares.

A profitable niche company

Automotive testing group AB Dynamics (LSE: ABDP) is an example of a company most investors won’t have heard of. It operates successfully in a niche where it has carved out a profitable role for itself. Its clients include the top 25 global vehicle manufacturers, all seven Euro NCAP laboratories and numerous government test authorities.

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Sales are being boosted by increasing vehicle safety regulation. It has also increased the amount of its recurring revenue in recent years, which is helpful as clients delay purchasing decisions because of Covid-19.

In the short term, R&D in the automotive sector will take a hit from Covid-19 and electric cars could well revolutionise the industry, but in many ways AB Dynamics looks to me to be a hidden gem with huge growth potential.

It has barriers to entry, strong customer relationships, cash on the balance sheet and is profitable. These all give me confidence in its future. 

An AIM growth share with Asian growth potential

Polar Capital (LSE: POLR) is a boutique asset manager. As it’s in the financial industry, it was hit hard by the market sell-off earlier this year. The bounce-back has been strong and the shares have nearly recovered the ground they lost. I think there’s further to go though.

Polar Capital has been ramping up the number of teams within the group. This will boost assets under management in future years I believe, which should then feed into greater earnings and profits.

The group also has far greater opportunities to expand into new geographies such as Asia. That is an area of focus for the asset manager right now, which could bear fruit in the coming years for investors who buy the shares cheaply. Given its growth potential, the shares are cheap, with a P/E of only 12. Its an asset-light model so the group has little debt, which is good at a time like this.

Capitalising on the growth of gaming

Sumo Group (LSE: SUMO) is in the red hot gaming sector. But it’s not the most well known company in the sector. It develops games like Team Sonic Racing and has eight UK studios.

Growth in earnings and revenue has been impressive in recent years. For example, revenue has gone from £8.6m in 2016 to £49m in 2019.

As part of its strategy, the video games service provider wants to acquire earnings-enhancing premium video game service providers and complementary video game developers. This could be a catalyst for growth if bolt-on acquisitions are managed and integrated well. Rival Team17 has successfully done this and seen subsequent share price growth.

With a market cap of around £300m, the group has plenty of room to grow. It’s in a growth industry, has a strong portfolio of games, could up the number of releases each year and it’s profitable. This combination makes me think this hidden gem AIM growth share could continue to do well for shareholders. 

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

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Andy Ross owns shares in Team17. The Motley Fool UK has recommended AB Dynamics. 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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