AIM Prospector Blog - July 15th

I have been a customer of Stockopedia’s for several years and am happy to be able to tell Stockopedia readers how I use the system to discover investment opportunities.

The Stockopedia product is driven by a comprehensive database of corporate account statements. It is a dream for investors who prioritise a company’s corporate performance in their investment decision-making process

The Stockopedia system enables stock-pickers to seek out investments based on almost any financial criteria. For example, growth investors can simply screen for companies that have delivered year-on-year earnings growth for at least, say, five years. Income investors can filter on dividend yield and growth etc.

I credit Stockopedia with helping me discover some of my most successful recent investments. Good examples include Robert Wiseman Dairies (which popped up on a yield filter around one month before its takeover), T Clarke, Barclays and my one AIM-quoted shareholding, Begbies Traynor (up35% plus dividends so far).

To demonstrate the value of the system I have run two investment screens through Stockopedia to highlight some of the best companies on AIM.

• market capitalisation > £25m
• dividends growing year-on-year for at least 3 years
• average annual EPS growth > 5% per annum over the last five years
• average annual sales growth > 5% per annum over the last five years
• sales increasing year-on-year for the last three years at least
• average annual per share dividend growth > 5% per annum over
• the last five years
• EPS forecast to grow by at least 5% for the next year

Only fourteen AIM companies pass all of the tests. They are:

Of these, RWS, Caretech, Portmeirion and Brooks Macdonald are particularly noteworthy. RWS’ ten year sales, profit and dividend record makes it unique among AIM companies. Recent half-year results from the company showed a 28% increase in sales, 6% rise in operating profit and a 9% dividend hike. EPS for the full year is expected to come in 8% above last year’s figure (Stockopedia also contains consensus forecast data). Caretech appears to be the last expensive of the lot. According to the Stockopedia data, the care home provider is trading on just 8.5 times forecast profits for the year, with an expected dividend yield of 2.9%.

As for Portmeirion, Stockopedia shows that the shares are currently priced at 13.9 times forecast earnings for the year and come with an expected dividend yield of 3.3% (the figures in the tables are ‘smoothed’ ratios). Brooks Macdonald shareholders have enjoyed the fastest dividend growth. Payouts from the investment management business have increased, on average, by 47% a year in the last five years.

My second filter is much simpler and lists all those AIM companies that have delivered average annual growth in earnings per share of more than 5% a year over the last five years. Of these, I have picked out five companies that look particularly interesting in the table below. Young & Co may be worth further research. While all the current comment around pub chains is negative, Young’s is proving that it is possible to thrive.

The annual subscription to Stockopedia is dwarfed by the gains I have made from shares that it has helped me to find and research. If you find this service useful, I highly recommend that you take a trial.

This post was written by David O'Hara, Editor of AIM Prospector, as part of an advertising feature for the July edition of AIM Prospector.

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AIM Prospector is a Blackthorn Focus publication.