The FTSE AIM 100 index represents the largest 100 companies by market-cap listed on the Alternative Investment Market (AIM). There are a few exciting smaller companies in this index.
Here are three I’d consider investing in this October if I had money sitting idle in an ISA.
Ashtead Technology
The first stock is Ashtead Technology (LSE: AT.). I invested in it back in January at 596p. By May, it had rocketed to 880p. Now? It’s dropped back at 582p! Talk about a rollercoaster ride.
This is an undersea equipment rental provider for the global offshore energy sector. It has a £467m market-cap.
In H1, revenue surged 61.4% year on year to £80.5m, while adjusted pre-tax profit jumped 38.6% to £19.6m. Both were record highs.
Analysts see earnings rising by 52% over the next two years. So this is a high-growth business.
One risk though is that most of the firm’s growth is down to acquisitions. While this is working out well, it also opens up the risk of overpaying for businesses, eroding shareholder value in the process.
Still, I rate this stock highly. The long-term structural growth of offshore wind infrastructure should support strong growth in future. And most of the firm’s equipment is interchangeable between renewables and oil and gas. I like this optionality.
Based on earnings forecasts for FY25, the stock’s trading on a forward P/E ratio of 14. I think that represents great value for a high-quality growth stock.
hVIVO
Next up is hVIVO (LSE: HVO), a leader in running human challenge trials. These are where volunteers are deliberately exposed to a virus or pathogen to test a treatment.
My mate got me onto this one. He does these paid trials, he says, to contribute to scientific progress. Whatever his motivations, I owe him a pint because the stock’s doubled over the past 18 months.
Growth has been strong, with revenue rising 30.6% to £35.6m during H1. Basic adjusted earnings per share (EPS) jumped 30.6% to 0.81p.
Management said 100% of this year’s £62m revenue guidance is fully contracted, with good visibility into 2025. By 2028, it’s targeting £100m in revenue.
This growth will be supported by its brand new facility in Canary Wharf. This is the world’s largest human challenge trial unit.
One risk here might be increasing competition in the field, which could erode hVIVO’s market share and profitability.
The market-cap is just £192m, giving the stock a reasonable forward P/E ratio of 17.5.
Keystone Law
Lastly, we have Keystone Law Group (LSE: KEYS). It operates a platform for lawyers, allowing them to work flexibly and take home around 75% of cash collected from their clients (higher than usual).
Keystone’s scalable business model enables it to efficiently onboard new lawyers, supporting continuous growth. It now has 557 legal professionals, up from 279 in 2018.
Again, competition could be a risk. As more firms adopt flexible, tech-enabled models, it might face up-and-coming challengers.
For now though, the £197m group’s chugging along nicely. Revenue grew 8.3% to £46.5m in H1, while basic adjusted EPS increased 7.3% to 14.6p.
The forward P/E multiple’s higher at 22.5. But the stock also carries a 3% dividend yield, underpinned by strong cash generation.
