History may look back on 2020 as a transformational year for Aim, London’s junior stock exchange. Analysts were expecting a torrid year amid the pandemic and uncertainty over Brexit. Yet by the summer, Aim had fully recovered its initial losses and on 31 December it was far higher than where it began the year. Moreover, firms on Aim raised £5.76bn from investors last year, a 50% rise on 2019. Aim is also maturing. Today there are 23 companies valued at over £1bn; in 2015, there were just three.
Free from IHT
Note too that there are generous tax reliefs available on Aim. Certain stocks are inheritance-tax free if you hold them for two years and still hold them on your death. And you can now hold them in an Isa. This has given rise to the Aim IHT Isa: investors can transfer their capital from an Isa to an Aim Isa and shield their investment from inheritance tax. Investors can choose a ready-made Aim Isa. We like those run by Octopus Investments, Fundamental Asset Management and RC Brown. But for those happy to monitor their holdings, ensure they continue to qualify for IHT relief and keep meticulous records of when they bought them, these stocks are worth considering.
Established in 2001 and admitted to Aim in 2014, Gamma Communications (Aim: GAMA) provides communications services to the business market in the UK and mainland Europe. Services range from corporate phone systems to Wi-Fi and a mobile network. Approximately 70% of Gamma’s revenues are generated by a network of over 1,000 channel partners – third-party businesses that sell Gamma’s communication services. The partners give Gamma access to a large indirect sales force, enabling cost-efficient expansion. There should be plenty of growth to go for as old analogue systems are phased out and businesses require greater flexibility, a development highlighted by the pandemic. Gamma recently noted that its performance was “significantly ahead” of expectations.
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Testing for telecoms
Calnex Solutions (Aim: CLX) provides test and measurement services to the global telecoms industry. These solutions allow its customers to validate the performance of telecom-network infrastructure. A key driver of future growth for the business will be the rollout of 5G mobile networks. 5G infrastructure needs to be more stable than 3G and 4G as it will support more services and the “internet of things” as well as applications such as driverless cars. Connectivity therefore needs to be extremely secure and with that comes a growing need for Calnex’s testing instruments and solutions. Customers include blue-chip telecom and internet infrastructure firms such as Vodafone, Google, and Cisco. The business has grown sales from £8.4m to £13.7m in just three years.
Next Fifteen Communications (Aim: NFC) is a global marketing and communications group. Around 50% of revenues come from selling its services to the thriving technology sector. Clients include Microsoft, Google, Facebook and Amazon. Next Fifteen is a diverse business offering services including digital content, PR, marketing software and market research. Results for the year to 31 January 2021 will exceed expectations. Sales in the five years to 31 January 2020 rose from £129.8m to £248.5m.
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