Three Aim-listed firms that will thrive in a post-Brexit world

Matt Tonge and Victoria Stevens of the Liontrust UK Smaller Companies Fund pick three Aim-listed firms that will survive Brexit turmoil.

Two professional investors tell us where they'd put their money. Matt Tonge and Victoria Stevens of the Liontrust UK Smaller Companies Fund pick Aim-listed firms that will survive Brexit turmoil.

With Brexit looming, a key question for investors is the potential impact on smaller listed companies. If we leave without a deal, many that rely on our links with the EU will suffer short-term turbulence as we all get used to a new trading environment.

The problem of tariffs has already been largely offset by a weaker pound, but red tape and logistical problems could prompt some small caps' customers to look elsewhere to ensure their supply chains remain uninterrupted.

In this environment, companies shielded from strong competition in their industries are likely to prove the most resilient. One of the most powerful barriers to entry for potential competitors, we believe, is intellectual property: patents, copyrights, trade secrets or know-how that competitors struggle to replicate.

All three of the following companies base their businesses on intellectual property, and their customers would struggle to replace them even if disrupted trade made them inclined to do so.

Protecting offshore wind farms

Since spotting a gap in the market in 2009, Tekmar Group (Aim: TGP) has become the world's leading supplier of cable protection systems for the offshore wind market. Its patent-protected Teklink system has been installed in the harsh environments at the base of offshore wind turbines over 6,000 times since the company was founded without a single failure to date. The technology replaces older systems that are unreliable, more difficult to install and more expensive. Tekmar has captured a dominant market share, and with the cost of producing offshore wind now roughly on a par with extracting fossil fuels, demand for this clean source of fuel is sure to keep growing.

Driving robots

Great British engineering is also on display at AB Dynamics (Aim: ABDP), which supplies the global motor industry with advanced testing systems. These comprise driving robots and guided soft targets, allowing car manufacturers to drive their cars around test tracks in a precise and repeatable manner, thus testing the performance of increasingly popular advanced driver-assistance systems.

AB Dynamics has little global competition. Moreover, Euro NCAP, a Brussels-based European transport industry body focusing on car safety, has begun using the company's products in crash tests. This bodes well for broader industry adoption.

Profit from paper

Finally, we would look to paper manufacturer James Cropper (Aim: CRPR), based in Burneside, Cumbria. This company has applied skills honed over nearly 200 years of paper production products include book bindings and digital photography paper to high-performance non-woven materials, which is where their intellectual property comes in.

James Cropper's technical fibre products division is a world leader in the production of non-woven "veils" extremely light sheets of fibre that add specific performance qualities to composite materials, such as durability, strength or fire retardancy. The veils are used in a variety of applications, from hydrogen fuel cells to Lockheed Martin's F35 fighter jets.

Recommended

How to prepare your business for Brexit
Small business

How to prepare your business for Brexit

Whether we have a Brexit deal or not, new procedures for importers and exporters will apply from 1 January. Get your business ready now.
27 Nov 2020
Brexit begins: what do the UK and the EU want from a trade deal?
Brexit

Brexit begins: what do the UK and the EU want from a trade deal?

With Brexit now done, the trade talks can begin. But who wants what from a UK/EU trade deal, and how likely are they to get it?
3 Feb 2020
Buy into the “contrarian” appeal of US growth stocks
Investment trusts

Buy into the “contrarian” appeal of US growth stocks

Investors should ignore the shift towards value stocks, says Max King, and stick with fast-growing American tech stocks. Here are two of the best inve…
26 Jan 2021
Three clean energy stocks for your portfolio
Share tips

Three clean energy stocks for your portfolio

Professional investor Christian Roessing of the Pictet Clean Energy Fund highlights of his three favourite stocks at the forefront of the clean energy…
25 Jan 2021

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021