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The Aim 100

We assess the top half of the junior market table
April 28, 2017

As we wrote last week, the Aim 100 has provided strong capital growth on both a one-year and five-year view. Yet if you look at the companies that have come to the alternative market over the past half-decade, a majority (54 per cent) have seen their share price fall since first close.

Let's consider the biggest winners and losers. The best performing float on the junior market, which has raced to number five in this list, is tonic maker Fevertree Drinks (FEVR). It came to the market in November 2014 at 134p a share, but shares in the company now change hands at close to £16.

It's the kind of story that investment dreams are made of. In second place, according to Capital IQ data, is gaming platform provider Quixant (QXT), which we covered last week at number 72. It has been on the market since May 2013, delivering capital growth of more than 700 per cent. In fact, 27 companies have doubled in share price over that time, and - unsurprisingly - many are in this week's write-up.

There are a few disrupters among this pack. At number 12 is hybrid estate agent Purplebricks (PURP), which, together with its main market accomplice Rightmove (RMV), is keeping estate agents up at night. Online fashion retailer Boohoo.com (BOO) listed in 2014, and despite a rocky start now sits with Asos (ASC) in the top three by market capitalisation - at the time the data were captured.

But for every growth story that has worked out in the past five years, there is 1.2 that haven't. Buyers at the 2012 IPO of courier DX (DX.) have seen the share price fall 93 per cent - this is a group that has had more than one unsuccessful run at the public market.

Advertising software company Adgorithms (ADGO) was another Aim nightmare: listing in June 2015, shortly thereafter revealing half-year results where the top-line increased by more than three-quarters year on year, and then managing a massive profit warning before the year was out.

The horror stories, and newcomers' five-year performance data - playing out against supportive equity markets - may be a reason to avoid the junior market at IPO. But the second year of outperformance in the Aim 100, and the fact that one-third of these companies have a dividend yield above 2 per cent, suggests safer ground.

The problem then becomes the valuation. Of those that can be valued using the measure, 42 of the index constituents trade above 20 times expected earnings. Here are our thoughts on what may be worth the price.

For our complete run down from 50-1 see below:

Aim 100: 50-41

Aim 100: 40-31

Aim 100: 30-21

Aim 100: 20-11

Aim 100: 10-1

And for 100-51:

Aim 100: 100-91

Aim 100: 90-81

Aim 100: 80-71

Aim 100: 70-61

Aim 100: 60-51