We asked our freelance writers to share their top picks for the stocks listed in the Alternative Investment Market (AIM) and investors – here's what they said in November!
[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]Gamma Communications
What it does: the company provides technology-based communications services across the UK and continental Europe.
Written by Kevin Godbold. Gamma Communications (LSE: GAMA) is a giant by AIM standards with a market capitalization of around £1.57bn. But it didn't start like that.
The firm arrived on the FTSE AIM market 10 years ago and has since delivered well-balanced growth in revenue, earnings, cash flows and dividends. Not all AIM stocks are junk as this rising star proves.
City analysts expect more growth to come, and the company's recent acquisitions in Germany may help supply. But as businesses grow, they also face risks. Gamma has been winning for a long time and maybe because of a setback or two.
Another possibility is that well-funded competitors may begin to enter the firm's profitable niche segments in the market. Or maybe the Gamma will make an odd discovery.
However, recent updates have been positive and the outlook is commendable. I will focus on growing the business now.
Kevin Godbold has no shares in Gamma Communications.
YouGov
What it does: YouGov is a market research company, most of its revenue from the USA.
Written by Alan Oscroft. Several AIM stocks have struggled this year, with YouGov (LSE: YOU) one of the worst players.
In June, the company warned that full-year earnings could be 32% below analyst consensus at the time. Stocks have crashed, and despite a few hints of health in the coming months, are near 52-week lows now.
My biggest fear is that we could get more bad news, as we could see slow demand across the sector.
But analysts expect strong earnings growth next year, even after the cuts. And they don't think the dividend will suffer, even though there is only a forecast yield of 2.2%.
We could be looking at a price-to-earnings (P/E) ratio of 16.5 in 2025, falling below 12 in 2026.
AIM's sentiment is weak, so short-term futures may be erratic. But I see an attractive long-term valuation here.
As YouGov develops its use of artificial intelligence, it may just be the first to introduce AI to AIM.
Alan Oscroft has no position with YouGov.
Warpaint
What it does: Warpaint makes color cosmetics under the W7 and Technic brands. It sells them at Tesco and major retailers in the US and Europe, as well as its website.
Written by Harvey Jones. Most of my portfolio is drawn from FTSE 100and the beating of FTSE 250. I only own one AIM listed stock but I've chosen it carefully because it's a good thing: Warpaint in London (LSE: W7L).
Shares in the specialist color cosmetics provider are up 80.16% over the past 12 months, and a blockbuster 614.84% over five years.
I bought Warpaint after seeing that it had been riding earnings guidance, boasted high cash flow, no debt and a strong dividend record.
On 17 September, I was delighted to see it post a 66% jump in first-quarter earnings to £12m, with group pre-tax profits up 76% to £10.9m.
Warpaint's share price jumped on the news, but then retreated along with the rest of AIM. Perhaps because investors fear the Budget will hit the indexation inheritance tax break.
Warpaint shares aren't cheap, trading at 30.16 times earnings. The yield is only 1.67% but that's a big drop from the rocketing share price. I expect sales to pick up again as the cost of living situation eases, unless consumers trade up to expensive brands when they feel overwhelmed. I doubt it, though. I will use the dip to fill my stake in November.
Harvey Jones is a shareholder in Warpaint.
Yü Group
What it does: Yü is an independent supplier of gas and electricity to businesses across the UK, and a smart meter installer.
Written by Edward Sheldon, CFA. Yu (LSE: YU.) sharing looks really interesting to me right now. There are several reasons why.
The first is that the company has recently produced impressive and modest growth. In the first half of 2024, revenue grew 60% to £313m while earnings per share jumped 52% to 88p.
The second is that the dividend is increasing at an incredible rate. In H1, the premium rose 533% to 19p. Currently, the yield is around 3.5%.
Another reason is that stocks look cheap. As I write this, the company's price-to-earnings (P/E) ratio is just eight.
As for the risks, there are a few to be aware of. Yü operates in a competitive market. Currently, it has no control over energy prices.
I think the stock is worth a closer look now, though. Given the low valuation and rising dividend yield, there's a lot to like.
Edward Sheldon has no position in Yü Group.
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