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AlphaScreen: Aim stocks dominate Quality results

Fast paced growth market shares should not normally find favour in a screen looking for long term quality characteristics, but this month's screen has found 10 Aim stocks which pass all criteria
AlphaScreen: Aim stocks dominate Quality results

 

  • Quality screen returns more than 30 Aim stocks which pass at least eight out of nine tests
  • Only three large caps pass all tests

Growth company markets such as Aim are not traditionally hunting grounds for investors looking for companies on quality criteria. Of course, there are a significant number of stocks on the junior market which have the potential to pass a quality screen, but progress tends to be less predictable for smaller companies on growth markets as often criteria such as Return on Equity are compromised by the higher levels of investment often required in companies in the earlier stages of their growth.  The charts below for performance of our large cap and small cap selections over time show how large cap outperformance has been far more predictable. 

But the Aim market  has proved a fertile hunting ground for our quality screen this month with a total of 34 Aim stocks passing eight or more of the nine tests set by our quality screen with 10 passing all nine tests. By contrast, the large cap screen only returned three companies passing all of our quality growth tests. 

Fast fashion stocks Boohoo and Asos scored well with the former passing all nine tests and the latter only failing on one test, that of Return on Equity. 

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