The Alternative Investment Market (AIM) is seen by many as a hunting ground for stocks that can generate vast returns. These are the types of fast-growth small-caps that ex-Fidelity fund manager Peter Lynch once called 10-baggers. Over the past five years they’ve included the likes of Judges Scientific, Walker Greenbank and ASOS. But despite these successes, many AIM companies are hugely speculative, pre-earnings ‘story’ stocks. That means they often go on to disappoint their shareholders. Last weekend we helped The Telegraph track down some of the best and worst quality shares that AIM currently has to offer. This is what we found…Many investors look in the wrong placeChanges to tax rules last year made it much more appealing for investors to trade AIM stocks. But while their allure might have grown, our research shows that many investors go about finding the best AIM shares in completely the wrong way. A general rule in the stock market is that good, cheap companies tend to outperform expensive, speculative companies. But if you look at this bubble chart – it shows that the most discussed AIM stocks on bulletin boards have a completely different profile to what works.
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