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2 AIM shares and 1 FTSE 100 stock I’ll potentially buy in November

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I’ve recently been looking at some AIM shares to add more rapid growth to a portfolio that has, until recently, mainly been about large-caps. I’ll outline one or two shares from AIM that I think show initial promise, along with a share that has kept paying a dividend. 

An AIM share with great long-term potential

DiscoverIE (LSE: DSCV), formerly known as Acal, is a manufacturer of electrical components. It has a market cap at the time of writing of around £540m. It’s a share I’ve had my eye on for a long time, but I think it could well be added to my portfolio soon. The group is developing new five-year targets and wants to expand in North America and Asia.

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Financially I think it looks good and it has a return on capital employed (ROCE) of 16%. Profit margins have been rising steadily and were at 8.5% at the end of March.

It intends to reinstate the dividend, which before Covid was growing at around 6% per annum, with cover between two to three times earnings.

An AIM listed and undervalued tech share

IMImobile (LSE: IMO) is a little bit smaller than DiscoverIE. It has a market cap of around £340m. I think it might be undervalued for a technology company on a trailing P/E of around 24.

The group is in cloud communications and personalised mobile messaging. It’s well aligned therefore with a growing trend for more and more mobile devices and data.

The technology company has 46 clients that pay over £500,000 per annum for its services so it’s not a small player. It provides a service customers are willing to pay for – the basic hallmark of a good company.

A positive September trading update shows that the company has the ability to grow at pace as gross profits rose 46%.

As the tech group targets growth in the US, I’m looking more into the company with a view to adding the shares to my portfolio. Its best days could well be ahead of it and as such, I feel it might become a future growth star and a dividend-payer.

The big FTSE 100 dividend stock

Legal & General (LSE: LGEN) is very different to my first two shares. It’s more in the value and income category of shares. The share price has fallen by 40% this year. The result of that is the dividend yield is now around 9%.

That would often be a warning to investors. I’m not sure in this instance it is as Legal & General has always paid out a high amount to shareholders. I think it’s more a consequence of the pandemic, rather than something to worry about.

Indeed, I feel the high yield on offer is an opportunity. I think buying the shares much more cheaply now gives me a future income. Also, when we return to more normal conditions, and the economy and stock market recover, the shares could grow much quicker than the wider market. That’s because they’ve been out of favour. 

I already hold these shares and they’re quite a large part of my portfolio already, so I’ll probably only add a small amount.

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Andy Ross owns shares in Legal & General. The Motley Fool UK has no position in any of the shares mentioned. 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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