Four AIM shares up over 1,000% since Covid crash

Three years after the Covid pandemic sent stock markets plunging, award-winning AIM writer Andrew Hore names the best performers and what he thinks of them, and some of the worst.

It is three years since AIM reached a multi-year low on 18 March 2020 as Covid began to dominate the news. The FTSE AIM All-Share index was one of the stock market measures that bounced back quickest, but it has been falling since September 2021 and underperformed other markets. This is making many AIM shares attractively valued.

The World Health Organisation declared Covid-19 a pandemic on 11 March and UK schools were closed on 18 March. The UK national lockdown was announced on 23 March. 

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By that time, AIM was already recovering from a sharp fall in the previous few weeks, which had left the FTSE AIM All-Share index at its lowest level since 2009. There was then a period of around 18 months when AIM outperformed most other markets, with a 122% increase. Since then, AIM has declined by nearly two-fifths, but it is still 36.9% ahead of the low on 18 March 2020.

Over the past three years, Nasdaq has risen by 68.6% and the Nasdaq 100 is up by 77.4%. The FTSE Fledgling index is 81.9% higher, while the FTSE 100 is 45% ahead. The only markets that have performed worse than AIM over the period are in Asia. Hong Kong and China are the two markets that have fallen.

AIM’s best performers

There is a mixture of companies among the better AIM performers over the past three years. Four of the top 10 are resources businesses, but the other companies are in different sectors. However, of the eight out of the 10 companies that were around a decade ago, seven have fallen in that time. The only one that has not is Sareum Holdings (LSE:SAR), which is developing treatments for cancer and autoimmune disease, even though there has been a fall of three-quarters since September 2021 because of regulatory challenges.

Premier African Minerals (LSE:PREM) is the best performer on the back of the Zulu lithium and tantalum project in Zimbabwe. This is one of the most consistently rising share prices over the past three years because of the prospects for lithium batteries. Premier African Minerals is the third-best performer since 3 September 2021 with a 276% gain.

There is positive news concerning intersections from boreholes at Zulu. This is affirming the plan to begin operations with a large-scale pilot plant. There could be production of spodumene concentrate within weeks.

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Five out of the top 10 have declining share prices since 3 September 2021. Escape rooms and bars operator XP Factory (LSE:XPF) bounced back sharply until the middle of 2021 when lockdowns were coming to an end. Even though the share price had started to fall, it was still 1,140% higher by 3 September 2021 making it the fourth-best performer over the period. The share price fell from 16.25p on 7 February 2020 to 2.75p on 18 March 2020. This means that the current share price of 20p is still below the level in February 2020.

Yet revenues have grown strongly as people return to XP Factory outlets and margins are improving. Management is rolling out more Escape Hunt and Boom Battle Bar sites. XP Factory could make a pre-tax profit of more than £2 million in 2023 and it could more than double the following year.

Sustainable polymers developer Itaconix (LSE:ITX) is another company that is lower than its three-year high but has good medium-term prospects. The share price has slipped this year following the £10.5 million fundraising at 5.1p a share, compared with the current price of 4.6p. That should be enough to fund further growth to get the business to breakeven.

A profit is still years away, but Itaconix sustainable speciality polymers have significant potential. The unique technology can build polymers using itaconic acid, which is produced from corn. This has similar properties to acrylic acid, which is oil-based. Non-phosphate detergents, hair care and other household products are the focus, but there are new product areas being developed. In 2023, revenues are forecast to be $8 million, compared with an addressable market in the billions.

10 best performers on AIM since the Covid crash low

Source: SharePad. Prices as at 23 March 2023.

Narrowband radio frequency communications networks developer CyanConnode (LSE:CYAN) has been quoted on AIM for nearly two decades and it has been a hard slog building up revenues. Despite its recent strength, the share price has fallen by 96.5% over the past 15 years. Contract wins in India for the use of the technology in smart meters have been gaining momentum and with its partners CyanConnode is bidding on more than £1 billion of contracts.

Management took advantage of the rise in the share price to bolster the balance sheet through a £5 million share issue at 17p. That provides the working capital for growth.  A loss is expected in the year to March 2023, but a small pre-tax profit is forecast for 2023-24.

The better performers are generally small, with affimer technology developer Avacta Group (LSE:AVCT) the only one that is large enough to be a constituent of the FTSE AIM 100 index. There was a sharp rise initially on the back of a potential Covid antigen lateral flow test. This ended up proving to be a disappointment when it was not effective with the Omicron variant.

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Avacta is the best performing constituent of the FTSE AIM 100 index since the low, but the growth was greater prior to September 2021. The share price has fallen by 17.9% since then. There are positive signs. AVA6000, a tumour drug developed using Avacta’s precision technology, has completed the fourth dose of a phase 1 study and, as well as proving safe and having lower toxicity than the current treatment, it shows that the drug is successfully targeting the tumour site. Higher doses will be tested.

Best FTSE AIM 100 performers

There are two oil and gas companies and three mining companies in the top 10 performers in the AIM 100. Six of them have lower share prices than in September 2021. There are 81 companies with higher share prices over three years. Five of the constituents were not on AIM in March 2020. There are 21 companies with higher share prices than when AIM hit its peak.

One thing that should be noted is that Wandisco (LSE:WAND) is the best performer in the index since 3 September 2021 with a 330% increase, but the recent suspension and revelations about its financials mean that the shares are likely to be worth much less than this valuation.

A string of large software contracts with mobile telecoms companies has helped Cerillion (LSE:CER) become the second-best performer. It is not one of the higher profile AIM companies, but in recent years trading has outperformed expectations and it could continue to do this. 

In the year to September 2022, revenues were 26% ahead at £32.7 million and underlying pre-tax profit jumped from £8.5 million to £11.9 million. There was some currency benefit in the figures, but the underlying growth in revenues is around one-fifth. The business is cash generative and net cash reached £20.2 million at the end of September 2022. Singer forecasts 2022-23 pre-tax profit of £14.1 million and believes that could be conservative.

10 best performers on FTSE AIM 100 since the Covid crash low

Source: SharePad. Prices as at 23 March 2023.

A problem company

Online retailer Boohoo Group (LSE:BOO) has been in decline since problems surfaced with its supply chain in the summer of 2020. The company has gone from being the largest company on AIM to barely scraping into the top 30 AIM companies by market capitalisation.

Revenues are falling as markets get tougher – there was an 11% decline in the four months to December and interim results will be published on 16 May. A full-year loss is forecast. There has been a recovery in the share price during 2023, which has pushed it back above the 50p placing price when boohoo joined AIM in March 2014.

Having initially outperformed, AIM is lagging behind larger company performance. That is partly down to the sector make up of different markets, but it is also not unusual for smaller companies to lag larger companies performance in tougher times and then be slower to recover. Larger companies are seen as a safer bet when the economy is not doing well. However, the smaller, higher-growth companies will attract interest when confidence returns.

10 worst performers on FTSE AIM 100 since the Covid crash low

Source: SharePad. Prices as at 23 March 2023.