- The two top-ranking Aim shares on our screen have been on the acquisition trail.
- Main market companies flagged are an interesting mix of structural growth and shorter-term recovery plays.
This month’s Alpha earnings upgrade momentum screen is topped by a mix of growth and recovery shares. The FTSE All share screen is led by specialist drug manufacturer Indivior (INDV), a very interesting company given its products help treat opioid dependency. Although it passes all of our tests, the share price momentum has taken a slight knock in recent days as major investor Scopia Capital sold 20m shares, although it maintains a 13.5 per cent stake.
Second on our screen is African-focussed telecommunications business Airtel Africa (AAF), which is a speculative play on development in African communications and e-commerce. It was covered in depth in Robin Hardy’s Alpha analysis on 23 September and the shares have seen strong momentum this autumn.
Last month both share classes issued by oil major Royal Dutch Shell (RDSA and RDSB) were top of the charts and although one-month share price momentum has come off, the company still passes all the other tests. Although fossil fuel investment is increasingly controversial, there is a short-to-medium term need for companies that can bridge the gap between old and new energy. Rated at 1.1 times enterprise value to sales (as of end September 2021) according to FactSet data, Shell is a fascinating transition risk-to-reward play.
On Aim, eleven companies pass all eight tests. These include specialist regulatory software business Marlowe (MRL), which tops the screen. Its move to acquire compliance software EssentialSkillz has been well received.
Sticking with software as a service (SaaS) businesses, online security specialist Kape Technologies (KAPE) is also riding high on our Aim screen. It is also on the acquisition trail, targeting virtual private network operator ExpressVPN, a move funded by a successful and over-subscribed recent share placing.
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