Historically, momentum has been the most powerful return factor for equities but it is also notoriously difficult to capture. Our screen focuses on earnings as well as price momentum and in fact, the screen's only compulsory criteria is companies must have earnings upgrade momentum. It's proving hard to find companies that pass all (or even most of) our tests, with high risk/potential reward small-cap shares scoring best.
- Research by the Numis Small Companies Index team, has shown momentum to be most powerful return factor for small cap shares. Presently, it is hard to find momentum anywhere on the London markets, but companies listed on the junior Aim market fail the fewest tests in this month’s screens.
- Monitoring and control products specialist Elektron (EKT) is the only company that passes every test this month. A handful of other Aim companies only fail the requirement to have forecast EPS growth of over 10 per cent in the next full year. These include Learning Technologies Group (LTG) and video games developer Team 17 (TM17), which have market capitalisations of £823m and £371m, respectively.
- Other smaller companies that fail the same test are drug development service provider Ergomed (ERGO), technology and services firm Mpac (MPAC), credit hire and legal services group Anexo (ANX) and Urban Logistics Reit (SHED).
