It has never been easy for investors who want to research AIM listed stocks. Lack of good data, the difficulty in separating investable companies from illiquid companies and filtering out the double listings have made it difficult for the investor to understand the nature and underlying business of the stock well enough to all but speculate on the potential high returns on finding the right small to microcap company to buy.research aim listed stocks
The allure of smaller cap companies is that they can yield higher returns because they are poised to grow faster – although granted this future expectation can be written into share prices, which is why fundamental analysis is so important. It is easier for a £250m market cap company to be worth £1b in the future than a £250b to become £1t. This is because large incumbents are often the traditional producers and are reluctant to focus on a disruptive innovation for fear of cannibalizing their legacy revenues. In contrast, smaller and newer companies who are not tied to an incumbent product have more incentive to direct resources to the next disruptive innovation.
With innovation and technological advances moving at an unprecedented pace, companies that are nimble and less burdened by layers of management may be better equipped to keep up with these changes. Previous strengths such as a strong brand, a large asset base and a wide distribution network are not necessarily reliable entry barriers. Instead we observe a new generation of winners, for example Airbnb, which although has a relatively small balance sheet, offsets this with a strong online presence.
The approach to investing in small cap companies is the same as analyzing any stock, in fact the business model can be easier to grasp than MNCs, due to their relative ease of understanding compared to their huge global counterparts – although this is offset by the additional risk.research aim listed stocks
Fortunately our service at Robur not only helps you research AIM listed stocks, but also ranks them from top to bottom performing based on their fundamental data. Start finding top performing stocks today here