There are over 1,000 companies traded on the Alternative Investment Market (AIM) with a collective market cap of around £70bn. Relative to the FTSE All Share, AIM stocks have underperformed, returning 50% over the last five years (compared with the Footsie’s 70%).
A typical AIM investment will be in a growing business, yet to reach its full potential. This is riskier, say, than investing in an established blue-chip stock, but your returns could be far higher.
ASOS, the online fashion retailer, is one of the most famous success stories since AIM’s debut in 1995. ASOS was initially priced at 3p and soared as high as £70 (now £30 — after a major swing in value).
Since last year investors have been able to put AIM shares in their ISA after the government decided to encourage investment in growing businesses; a further incentive arrived when stamp duty was removed from AIM stocks in April.
But never mind these perks, it’s still equally as imperative to find a company with a strong balance sheet that you trust will allocate capital well.
There are the three of the best performing AIM shares of the half-year (source: Capital IQ):
Leni Gas & Oil
Shares in Leni Gas & Oil (LSE: LGO) have surged this year on continued drilling success in Trinidad. Well GY-666, the third of 30 planned new wells at the Goudron Field, has been successfully drilled to a total depth of 3,357 feet, and following a review of the electric logs LGO estimates the presence of at least 394 feet of net oil play. Production at GY-664, the first well of the programme, delivered up to 326 barrels of oil per day from the Gros Morne formation, which was three times the volume of analyst forecasts.
Egdon Resources
Many a retail investor has high hopes for a shale gas boom in Britain. The gains could be immense, but look at how Poland’s shale gas sector collapsed to get a sense of the dangers. Shale gas explorer Egdon Resources (LSE: EDR) has seen its share price soar 178% in 2014, after signing a deal with France’s Total to fund drilling in exchange for assets. Egdon’s shale gas acreage in the UK is 140,000 acres.
GW Pharmaceuticals
GW’s (LSE: GWP) shares are up 150% since January, continuing an impressive rally that began back at the beginning of 2013. Revenue is generated from sales of Sativex, a cannabinoid drug used to treat multiple sclerosis spasticity. The company is nearing the end of Phase 3 cancer pain trials for Sativex, which has received Fast Track designation by the US regulator to help get patients faster access to the treatment.
