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 March!
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Pensana
What it does: Pensana is a rare earths miner planning to reduce China’s stranglehold in the market for these critical minerals.
By Mark Tovey. Pensana (LSE:PRE) has a mixed rare earth sulphate mine in Angola. When ore is extracted from such mines, there are only two options: send it to Australia or China to be processed. The latter country currently controls 85% of rare earths processing. This matters because neodymium, lanthanum, and other metals in the rare earths family are essential to electric vehicles, wind turbines, and smartphones.
Pensana’s plan is to challenge China’s dominance by setting up a processing facility in the Humber Freeport, northern England. It won £4m of UK government support through the Automotive Transformation Fund in October 2023.
However, Pensana is yet to generate revenue, and its ambitious production targets have drawn criticism.
Despite these challenges, the strategic importance of rare earths and Pensana’s potential to disrupt the market make it an attractive addition to my portfolio. I plan to invest in this AIM stock when I next have spare cash.
Mark Tovey does not own shares in Pensana.
YouGov
What it does: YouGov is a fast-growing international research company gaining insights from analysing marketing and opinion data.
By Kevin Godbold. YouGov (LSE:YOU) has a strong record of earnings growth and City analysts expect double-digit percentage gains for the current trading year to July 2024 and next year.
February’s half-year trading update is impressive and the outlook statement upbeat.
The directors acknowledged challenging market conditions and said client budgets had been under pressure. But YouGov’s customers are looking for high-quality, data-driven solutions, they said. Despite longer sales cycles, momentum accelerated in the second quarter of the firm’s trading year.
The top managers pointed to the robust sales pipeline and said they are “confident” in achieving current market expectations for the full year to July.
However, with the forward-looking price-to-earnings rating for next year in double digits, there’s plenty of potential for the share price to slide if the company misses its earnings estimates.
Nevertheless, despite the risks, the business is a high-quality growth outfit and may be worth its premium rating.
Kevin Godbold does not own shares in YouGov.
YouGov
What it does: YouGov is a market research company that focuses on public opinion, consumer intelligence, and data analytics.
By Charlie Carman. The YouGov (LSE:YOU) share price has risen 140% over five years and the strong growth trajectory may well continue.
Investment in technology has boosted margins, especially for the group’s customised research unit. This bodes well for YouGov’s existing long-term relationships and multi-year contract opportunities with new clients also show promise.
Elsewhere, YouGov’s acquisition of German consumer panel firm GfK has proved to be a success. The acquired business is currently trading ahead of expectations. Plus, new behavioural data sets on FMCG and retail consumer insights strengthen YouGov’s long-term client offering.
Handily, the company should also benefit from increased publicity during an election year, although political opinion polls are now only a small revenue source.
Granted, the shares aren’t cheap at over 25 times forward earnings. If demand for YouGov’s services proves weaker than expected, the valuation might not be justified.
Nonetheless, as things stand, I think this AIM stock merits serious consideration.
Charlie Carman does not own shares in YouGov.
