Where to find good value on AIM?
With much of the market looking quite fully valued it’s increasingly tricky to uncover decent value opportunities. Many high quality (and highly priced) small caps continue to deliver excellent results, seeing their shares climb ever higher and pushing up valuations.
That’s fine if they continue to deliver the desired results but for the few that disappoint the punishment is severe, with share prices subsequently falling dramatically. Results from a recruitment company we follow suggest its modest valuation is worthy of greater attention, more on that in our Blog and latest commentary.
This week brought a profit warning from previously high flying Solid State (AIM:SOLI) due to delays in a key contract; the shares subsequently tumbled more than 35%. Our Blog offers more on this disappointing update and revised broker estimates.
Having disappointed with a profit warning earlier in the year, Shoe Zone (AIM:SHOE), the value footwear retailer, reassured with its pre-close trading update. On many fronts the shares look decent value, much like the product offering. Senior management offloading a combined 2.495m shares at 190p a few days later was less reassuring although they still hold 50% of the equity so are well and truly aligned with others.
Sanderson Group (AIM:SND), the software and IT services business specialising in multi-channel retail and manufacturing markets in the UK and Ireland, issued a solid pre-close trading update. Our latest commentary can be downloaded here
In our hunt for value we have taken a closer look at results from Matchtech Group (AIM:MTEC), the specialist Engineering, IT and Telecoms recruitment agency, which now combines Networkers International. The shares are well off their August 2015 highs and with cash flowing and the valuation looking relatively modest they appear to be worthy of a closer look. Our latest commentary can be downloaded here .
Plexus Holdings (AIM:POS), the AIM quoted oil and gas engineering services business and owner of the brilliant POS-GRIP® method of wellhead engineering, announced excellent preliminary results for a business operating in the beleaguered oil and gas sector. For those prepared to read the full announcement we suggest you find a comfortable chair as it’s quite lengthy. Our Blog covering the results is somewhat shorter.
A recent Sharesoc investor event featuring AIM quoted EG Solutions (AIM:EGS), appears to have highlighted the issue of excessive management greed at this company. We issued a damning commentary on EG Solutions back in February 2013 pointing out how the founder and CEO had taken out huge sums of money from this loss making business to the detriment of other shareholders. While many institutional investors don’t appear to be too concerned about excessive management remuneration (shame on them!), reaction to the Sharesoc event suggests private investors are evidently more concerned.
Thankfully there are many excellent little businesses on AIM where management remuneration is far more modest and better aligned to shareholder return