We asked our freelance writers to share their top ideas for stocks listed on the Alternative Investment Market (AIM) to buy with investors — here’s what they said for January!
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FRP Advisory Group
What it does: FRP Advisory Group helps businesses in difficult situations in areas such as restructuring and accountancy.
By Muhammad Cheema. Unfortunately, due to the tough economic times we find ourselves in, businesses are struggling.
According to the Department for Business, Energy and Industrial Strategy, insolvencies increased by 13% year on year (YoY) to 6,342 in the second quarter of this year.
While this isn’t great for most businesses, it is for AIM stock FRP Advisory Group (LSE:FRP).
Its expertise in helping troubled businesses with services such as restructuring, insolvency, and financial advisory means that it’s likely to thrive in the current environment.
It has been experiencing a surge in growth. In the latest quarter, revenue increased 18.8% YoY. What’s even more impressive is that earnings grew by 49.2% YoY.
My one concern with the company is that it’s trading with a price-to-earnings (P/E) ratio of 21, which is quite expensive.
However, it’s growing very strongly and if the economy continues to struggle, I believe it will provide great returns to investors in 2024.
Muhammad Cheema does not own shares in FRP Advisory Group.
Jet2
What it does: Jet2 is a British budget airline operator, catering to short haul destinations mostly around Europe.
By Jon Smith. The travel and tourism sector is one that I’m bullish about as we start 2024. Therefore, I like Jet2 (LSE:JET) as a way to express this view.
The low-cost airline operator was hit hard by the pandemic, but finally the tide is turning. Over the past year, the stock is up 37%, as company financials improve. The half-year 2023 report showed that operating profit is now back above pre-pandemic levels.
Looking ahead, it commented that “current seat capacity for Summer 2024 at 17.19m seats is approximately 12% higher than Summer 2023”.
I think that there could be good potential for the AIM-listed stock to rally over the coming year. I do note that there’s stiff competition in this sector, particularly in the budget category. This could cause margins to be cut. Yet given the seat capacity for next year is already looking promising, it appears this risk is being contained.
Jon Smith does not own any of the shares mentioned.
Keywords Studios
What it does: Keywords Studios is a leading provider of technical and creative services to the video game industry.
By Edward Sheldon, CFA. Keywords Studios’ (LSE: KWS) share price has taken a huge 50%+ hit recently and I think the AIM stock is oversold.
The share price has fallen because of fears over generative artificial intelligence (AI). Investors are concerned that this new technology (which can do some amazing things) could reduce demand for services Keywords Studios offers such as art design and language translation.
This certainly is a risk to consider. However, I believe the fears are overblown.
Keywords Studios is active in the AI space itself and has been responsibly harnessing the technology for a number of years. Meanwhile, management said recently that it was excited about the opportunities that lie ahead.
With the shares currently trading on a price-to-earnings (P/E) ratio of less than 15, I think the risk/reward proposition here is very compelling as we start 2024. That’s a low valuation relative to the growth the gaming company is generating.
Edward Sheldon has no position in Keywords Studios.
Windward
What it does: Windward is a software company that operates a predictive maritime analytics platform.
By Ben McPoland. I think shares of Windward (LSE: WNWD) are well worth considering in January. This £72m firm operates a leading AI-powered predictive platform for the global maritime industry. It helps its customers manage risk by providing real-time intelligence relating to things like sanctioned vessels and potential drug smuggling.
Since the EU’s sanctions on Russia (and other regimes), identifying deceptive shipping practices has become increasingly important. This is benefiting Windward. It secured 48 new commercial customers during H1, almost as many as in the whole of 2022. And its revenue jumped 18% to $12.8m while its annual recurring revenue is also building nicely.
Now, I should point out that Windward is based in Israel. It says the tragic events there haven’t affected trading and its offices remain open. But it’s worth noting because the risk of the conflict spreading can’t be ruled out, unfortunately.
That said, I’m very encouraged by the AIM stock’s progress. It expects positive EBITDA in 2025 and the shares are trading at a reasonable 3.8 times sales. I’m planning to invest.
Ben McPoland does not own shares of Windward.
