Sep 28, 2024 · 22 min
AIM’s standout winners still have room to grow
IC035 AIM Market Success Stories with Further Room to Grow
The discussion tests whether patient, diversified investors can find durable growth and aligned management in a difficult small-cap market.
- 1Founder ownership and management alignment emerge as recurring features of several successful AIM companies.
- 2Time Finance illustrates how valuation, expected earnings growth, and the PEG ratio can reshape a small-cap investment case.
- 3Jet2, AB Dynamics, CVS Group, and Raspberry Pi show how patience can outlast changing market conditions.
Don't miss
Jet2’s rise from an AIM company to one of the market’s largest success stories crystallizes the episode’s case for patient investing.
The brief
Chris and Lord Lee frame AIM investing against a difficult small-cap backdrop, including debate over possible changes to business relief and the market’s wider appeal.
U Group, Elixirr, and Phonics anchor the discussion on resilience, international growth, founder-led management, and the importance of meaningful insider ownership.
Time Finance provides the valuation case study: a small, unfashionable lender whose expected earnings growth makes the PEG ratio a useful test of price.
AB Dynamics, CVS Group, and Jet2 show how long-term holdings can compound as businesses scale, while regulation, competition, and reinvestment create continuing risks.
Raspberry Pi’s main-market IPO broadens the lesson: investors need to understand the business, manage expectations, and diversify across several high-quality opportunities.
What was said on this episode
23 statements · 21 positive · 2 mixed
Successful AIM companies can grow substantially while remaining small within large markets.
“They're operating in vast markets and they could be multiple times their size, still be small constituents of their market. So there's loads of growth still to go for”
Listen at 1:26
U Group is valued at approximately nine times forward earnings.
“It's on a forward PE of just 9 times.”
Listen at 3:41
U Group has substantial room to grow from its current energy-market share.
“And hopefully this business is minuscule. Its market share now has gone from 1.4% to 1.8%. Crikey. It's got a lot of growth to go after. So yeah, U Group, one that people should be looking at.”
Listen at 4:19
Elixirr’s interim pretax profit increased 22 percent to £12 million.
“Pre-tax profit, these were interims again, up 22% to £12 million.”
Listen at 5:22
Investors should consider researching Phos.
“I would recommend other people to look at it”
Listen at 7:08
Phos has substantial future growth potential through international expansion.
“But yeah, absolutely fantastic. It ticks a lot of boxes. And a lot of growth to go for now. International expansion.”
Listen at 8:46
Time Finance appears attractively valued.
“It looks very good value.”
Listen at 9:21
Time Finance’s lending book has increased for thirteen consecutive quarters.
“13 consecutive quarters where its own lending book has risen.”
Listen at 9:52
Time Finance trades at slightly below ten times earnings.
“Rating based on PE multiples, just sub-10 times.”
Listen at 10:27
Time Finance’s PEG ratio is approximately 0.5, implying considerable potential growth.
“the PEG ratio, the price-to-growth ratio is only approximately 0.5. You've got a lot of growth here that could come through”
Listen at 10:33
Investors should ideally seek companies with PEG ratios below one.
“one should ideally look at a PEG ratio under 1”
Listen at 11:22
AB Dynamics supplies advanced automotive testing and simulation equipment globally.
“It manufactures advanced testing equipment for the automotive sector. It's expanded into other areas, so it does simulation and it supplies all the big automotive manufacturers around the world in every region.”
Listen at 11:49
Elixirr and U Group could become substantially larger in their markets.
“Elixir could be a lot bigger. U Group, look at, we've already said, look at how big that market is.”
Listen at 13:31
Investors should remain patient with CVS Group despite current difficulties.
“We would urge people to be patient. Yeah, it looks bleak at the moment, but this is a good business generating lots of cash”
Listen at 14:50
Veterinary practices should disclose ownership by larger groups more clearly.
“I think there's got to be greater disclosure, particularly if the practice is owned part of a big group.”
Listen at 15:11
Veterinary providers should clearly disclose prices and available alternatives.
“Clear disclosure on pricing so that the customer knows, the client knows immediately how much they're going to pay for things and what other options they might have.”
Listen at 15:18
Jet2’s efficient capital management enabled strong shareholder returns.
“it just shows you've got a market where a business that has managed capital efficiently has thrived and delivered huge returns to shareholders.”
Listen at 17:39
Investors should consider following founder-led companies, while recognizing the strategy can fail.
“And I think if any of the lessons, that's it. Follow the founders, although it doesn't work out all the time.”
Listen at 17:59
A roughly ten-year investment horizon can produce very strong results.
“If you've got a long-term time horizon, long-term circa 10 years, you can do incredibly well.”
Listen at 18:54
Good businesses should outperform slow-growth main-market companies over time.
“invest in good businesses and they will deliver for you, and they should outperform some of the slow-growth dinosaurs on the main market”
Listen at 20:03
Companies should underpromise and overdeliver when communicating expectations.
“better to underpromise really overdeliver”
Listen at 20:58
Argentex may recover from its current difficulties.
“even Argentex, we hope will turn things around.”
Listen at 21:28
Investors should diversify across multiple quality investments.
“Don't stick all your eggs in one basket. Spread your risk across a lot of good issues and you could do nicely.”
Listen at 21:34
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
Featuring
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