3 High-Quality AIM Stocks to Buy Today

Image source: Getty Images

Global equity markets have been volatile in 2022 and small cap stocks have generally been the hardest hit. Just look at the UK’s Alternative Investment Market (AIM), which is home to many small UK businesses. This year, many AIM stocks have fallen.

The good news for long-term investors like me is that AIM’s weakness has created some very attractive investment opportunities. With that in mind, here’s a look at three stocks I would buy today.

A leading FinTech company

One of my top picks right now is Alpha Effects (LSE: FX). It is a fast-growing, founder-led financial solutions provider specializing in foreign exchange risk management and mass payments.

A trade update released last month showed that Alpha FX currently has a lot of momentum. For the six months to June 30, revenue rose 35% to £46m. Meanwhile, the company significantly expanded its customer base over the period, growing its alternative bank accounts by 239%.

After a pullback in share price this year, Alpha FX stocks are attractively priced, in my view. With analysts expecting earnings per share of 62.2p for 2022, the forward P/E ratio is around 29. I don’t see it that high, given the strong level of growth here.

Of course, if growth slows, the stock price could fall given the high valuation. I’m comfortable with that risk though, given Alpha’s track record.

A cybersecurity game

Another AIM stock I would buy today is UK Group (LSE: GBG). It is a leading identity management solution provider serving blue-chip enterprises around the world (HSBC, volkswagenand ASOS are just a few of his clients).

GB Group shares have fallen this year and I think the fall is overdone. In the company’s recent annual results, for the year ended March 31, it posted record revenue of £242.5 million (up 11.4% year-on-year) and profit adjusted operating income above initial market expectations. And looking forward, the group said it is well positioned to successfully achieve its strategic and financial goals in fiscal year 2023 and beyond.

A risk to consider here is that the business could be affected by the weakening economy. With the stock now trading on a P/E ratio in the low 20s, I think the risk/reward profile here is attractive.

Video game champion

Finally, I would also buy Keywords Studios (LSE: KWS). It is one of the leading providers of technical services for the video game industry. This is another AIM company with momentum.

Recently, it said it expects to post total revenue growth of around 34% for the six months to June 30. Adjusted profit before tax is expected to increase by around 35% year-over-year. He added that he had seen “strong demand» for all of the group’s services.

Keywords started the year very well, building on the momentum gained in 2021commented CEO Bertrand Bodson.

It should be noted that the growth of the gaming industry may slow down a bit after Covid. This could potentially impact the growth of Keywords Studios. The forward-looking P/E of 32 here doesn’t really leave a margin of safety, so that’s a risk to keep in mind.

However, I’m thinking long-term here, and I think this AIM stock should do well as the gaming industry develops over time.

Comments are closed.