The 10 Most Successful Companies on AIM

Friday, Jan 04 2013 by
6

There are a large number of high quality smallcap companies listed on London's AIM market. Using Stockopedia's screening technology I've tried to identify the ten most successful companies on AIM today. I've used a number of metrics* to define 'most sucessful'.

By adjusting the market capitalisation demand, I whittled 1,100 AIM companies down to just 10. The winners (in order of descending market capitalisation) are:

I've picked out five of my favourites.

Portmeirion

You may be surprised to learn that a company specialising in tableware is one of the most successful companies in the UK today. Portmeirion has some fantastic assets: the ceramic brands Spode and Royal Worcester both date back to the late 18th century.

Chairman Dick Steele outlines the secrets of Portmeirion's success: "Our continuing investment in product development, our insistence on quality without compromise, our worldwide sales reach (75% of our sales come from outside the UK) and our prudent financial management. These factors all combine to deliver great brands."

Don't doubt the international stature of Portmeirion. Over 40% of sales are to the North American market. The company sells almost as much to South Korea as it does to the UK.

Portmeirion has never cut its dividend and has been paying out since 1988. EPS for 2012 is expected to be 8.1% higher than the 2011 figure and the dividend is forecast to rise 3.1%. That forecast dividend rise could prove conservative, the payout was raised 15% at the interim stage. Sales in the crucial H2 will determine the yield in 2013.

Judges Scientific

Judges Scientific is the holding company behind a collection of scientific instruments companies. The company has long had a strong private investor following who have been well rewarded: the shares have increased almost tenfold in the last five years.

CEO David Cicurel describes Judges' strategy thus: "Our strategy is to buy excellent companies, pay sensible multiples, repay debt and provide operating management an environment where they can thrive."

Frequently, companies have been purchased from private sellers approaching retirement. Judges' last acquisition was Global Digital Systems (GDS), a company involved in the design and manufacture of instruments for testing soils and rocks. Judges paid £7.7m GDS. Last year, GDS generated an operating profit of around £1.3m.

Judges' year-on-year success is finally getting noticed by the markets. It may not be too late to buy the shares, the company still trades at a discount to the kind of rating enjoyed by larger peers such as Renishaw.

Judges Scientific is expected to increase its shareholder dividend 50% this year, followed by another 10% rise the year after.

RWS Holdings

Expert translation services company RWS Holdings regularly pops up on statistical searches for successful companies.RWS has increased its dividend every year since flotation in 2003. Today, the company employs 350 people, most of whom are dedicated to RWS' patent translation operation. This field requires a double blessing of expertise: first in the application area and second the linguistic expertise. RWS is clearly capable of charging for this service, in 2012 the company reported a net profit of £12.7m on sales of £68.8m.

So what is behind RWS' success and where will further growth come from?"The key to RWS’ success has been its focus upon delivering the highest quality services to a sophisticated and demanding customer base" says Andrew Brode, RWS' Executive Chairman. "Future growth will be driven by the rapid globalisation of intellectual property protection and the services required to provide that protection."

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First Derivatives

Headquartered in Newry, First Derivatives is one of just a handful of London-listed companies from Northern Ireland. The company was founded by its CEO Brian Conlon. Today, Mr Conlon owns 46.5% of the shares in the company.

First Derivatives provides financial software products and expertise to investment banks, hedge funds and stock exchanges around the world. Its products are used by algorithmic trading desks and high-frequency traders.

The company recently announced its largest ever new software contract. This is a multi-year contract to provide market surveillance software to the Australian regulator. Australian press reports suggest that the customer was working with a £30.5m budget. That is two thirds of First Derivatives entire turnover during the 2012 financial year.

First Derivatives' success means that the company does not just pass my success criteria, it absolutely smashes through them. In the last five years, EPS has grown, on average, by 16.1% per annum. In that time, the dividend has been increased by an average of 17.4% a year. EPS for 2013 is expected to increase by 13.4%, followed by another 25.0% rise the year after.

Mattioli Woods

With a market capitalisation of £36m, finance firm Mattioli Woods is the smallest company to make my list. On the face of it, the company appears to be a smaller (and cheaper) alternative to Brooks Macdonald. Mattioli Woods administers over 2,900 SIPP schemes and provides a range of employee benefits and wealth management services. The company boasts £3.02bn of assets 'under advice and administration'. In the last five years, sales have grown from £9.0m to £20.5m. In that time, the company's dividend per share has been increased year-on-year from 2.55p to 5.55p.

The shares trade on just 9.0 times 2013 forecasts, falling to 7.9 times expected profits for 2014. That's the cheapest of any of the companies to make my top ten.

* My Success Criteria

  • Dividend has been growing year-on-year for at least three years.
  • Compound Annual Growth Rate of EPS (earnings per share) in last five years must be greater than 5%
  • Compound Annual Growth Rate of DPS (dividend per share) in last five years must be greater than 5%
  • Compound Annual Growth Rate of turnover in last five years must be greater than 5%
  • Sales must have increased year-on-year for the last three years at least.
  • Forecast EPS growth must be at least 5% this year.

By demanding a market capitalisation > £25m I hope to eliminate companies too small to trade in meaningful size. 

Putting all this into Stockopedia Premium gave the results above. 


Filed Under: AIM, Growth Investing,

Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. The author may own shares in any companies discussed, all opinions are his/her own & are general/impersonal. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested.


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    Change
    0.0  0.0%
    P/E (fwd)
    19.8
    Yield (fwd)
    2.2
    Mkt Cap (£m)
    748.5

    Nichols plc is engaged in the supply of soft drinks to the retail, wholesale, catering, licensed and leisure industries. The Company operates in two segments: Still and Carbonate. Its brand portfolio includes Vimto, which is sold in over 65 countries and Levi Roots, Weight Watchers, Sunkist & Panda, which are sold in the United Kingdom. The Company's soft drinks brands include Cabana, Ben Shaws & Dayla. Its business segments operate in the Middle East, Africa, the Rest of the World and the United Kingdom. Ben Shaws Dispense Drinks is a supplier of cold soft drinks on draught into pubs, clubs, restaurants and other leisure outlets. Dayla manufactures cold soft drinks on draught and supplies into soft drink wholesalers. Cabana is a wholesale supplier of cold soft drinks on draught into pubs, clubs, restaurants and other leisure outlets. more »

    Share Price (AIM)
    1003.07p
    Change
    0.0  0.0%
    P/E (fwd)
    20.2
    Yield (fwd)
    2.1
    Mkt Cap (£m)
    370.3

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    Change
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    P/E (fwd)
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    Yield (fwd)
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      Is Abcam fundamentally strong or weak? Find out More »


    2 Comments on this Article show/hide all

    StrollingMolby 7th Mar '13 1 of 2
    1

    Asagi,

    One of your Ten above, Nichols (LON:NICL), goes from strength to strength. Results announced today show the following for the Vimto-producer...

    Highlights:

    · Group sales up 9% to £107.8m (2011: £98.9m)

    · Profit before tax up 13% to £20.5m (2011: £18.1m)

    · Earnings per share up 14% to 41.4p (2011: 36.3p)

    · Proposed final dividend of 11.7p, total dividend for the year up 13% to 17.3p (2011:15.3p)

    · Sales in the UK grew 9%, significantly ahead of the market growth rate

    · International sales up 8% year on year

    The proposed merger of A.G.Barr (LON:BAG) and Britvic (LON:BVIC) (albeit subject to MMC approval) shows the synergies that can be found in this sector, and I wouldn't be in the least surprised if larger groups are running the rule over Nichols and its products.

    Cheers!

    SM

    | Link | Share
    Blackthorn Focus 11th Mar '13 2 of 2

    Blackthorn Focus is pleased to report that Judges Scientific (LON:JDG), Mattioli Woods (LON:MTW), Portmeirion (LON:PMP), RWS Holdings (LON:RWS) and WYG (LON:WYG) will all be presenting at the forthcoming Blackthorn Focus event AIM Investor Focus 2013 on April 17th.

    AIM Investor Focus 2013 is a daytime event in the City and I hope you will be able to join us.

    Full details are on the Blackthorn Focus event page here.

    | Link | Share

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About Blackthorn Focus

Blackthorn Focus

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Blackthorn Focus is a publications and events organisation dedicated to Europe's financial markets. Blackthorn Focus was established in 2009 by David O'Hara. After several years experience of financial media with  AQ Research and many more as an active investor, David realised certain areas of the financial markets were not operating to the satisfaction of participants. Blackthorn Focus was established to create the media necessary to help bring about change and improvement. more »



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