Best AIM stocks to consider buying in November

We asked our freelance writers to share their best ideas for stocks listed on the exchange Alternative Investment Market (AIM) with investors – this is what they said for November!

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Gamma communication

What it does: The company provides technology-based communications services in the United Kingdom and mainland Europe.

By means of Kevin Godbold. Gamma communication (LSE: GAMA) is a big beast by AIM standards with a market capitalization of around £1.57 billion. But it didn’t start that way.

The company arrived on the FTSE AIM market ten years ago and has since achieved balanced growth in sales, profits, cash flow and dividends. Not all AIM shares are rubbish, as this rising star proves.

City analysts expect more growth in the future, and the company’s recent acquisitive expansion into Germany could contribute to that. But as companies grow, they also face risks. Gamma has been winning for a long time and may have to deal with a few setbacks.

One possibility is that well-financed competitors will bite into pieces of the company’s profitable niche in the marketplace. Or perhaps Gamma makes a takeover that ends badly.

Nevertheless, recent updates are positive and the outlook is optimistic. I would now focus on the growing business.

Kevin Godbold owns no shares in Gamma Communications.

YouGov

What it does: YouGov is a market research company that gets most of its revenue from the US.

By means of Alan Oscroft. A number of AIM shares have struggled this year YouGov (LSE: YOU) one of the worst artists.

In June, the company warned that full-year profits were likely to be 32% below the analyst consensus at the time. The shares crashed, and despite some signs of life in the months since, they are now near a 52-week low.

My biggest fear is that we could get more bad news as we may see further demand slowdown across the industry.

But analysts expect solid earnings growth next year, even after cuts. And they don’t think the dividend will suffer, even though only a 2.2% yield is expected.

We could be looking at a price-to-earnings (P/E) ratio of 16.5 in 2025, falling to under 12 in 2026.

AIM sentiment is not strong, so the near-term future could be volatile. But I see an attractive long-term valuation here.

With YouGov pushing the use of artificial intelligence, it could be the one to put the AI ​​into AIM.

Alan Oscroft has no position in YouGov.

War paint

What it does: Warpaint makes color cosmetics under the W7 and Technic brands. It sells them at Tesco and major retailers in the US and Europe, plus its own website.

By means of Harvey Jones. The vast majority of my portfolio comes from the FTSE 100next to a bit of the FTSE 250. I only have one AIM listed share, but I made a good choice because it’s a goodie: War paint London (LSE: W7L).

Shares in the specialist color cosmetics supplier are up 80.16% in the last twelve months, with a blockbuster 614.84% over five years.

I bought Warpaint after discovering that it had repeatedly raised earnings estimates, had ample cash reserves, had no debt, and had a strong dividend yield.

On September 17, I was pleased to see first half profits up 66% to £12 million, while group pre-tax profits rose 76% to £10.9 million.

Warpaint’s share price jumped on the news, but has fallen along with the rest of AIM. Possibly because investors fear that the budget will reduce inheritance taxes for the index.

Warpaint shares aren’t cheap, trading at 30.16 times earnings. The yield is only 1.67%, but that is largely due to the rising share price. I hope sales will pick up again as the cost of living crisis subsides, unless consumers switch to more expensive brands when they feel more positive. I doubt it though. I will use the dip to top up my bet in November.

Harvey Jones owns shares in Warpaint.

Yü Group

What it does: Yü is an independent supplier of gas and electricity to businesses in the UK, and an installer of smart meters.

By means of Edward Sheldon, CFA. Yu (LSE: YU.) shares seem very interesting to me at the moment. There are several reasons why.

The first is that the company has seen phenomenal sales and revenue growth recently. In the first half of 2024, revenues rose 60% to £313m, while earnings per share rose 52% to 88p.

The second is that the dividend is being increased at an incredible pace. For the first half of the year, the payout was increased by no less than 533% to 19 cents. The return is currently around 3.5%.

Another reason is that the shares look dirt cheap. As I write this, the company’s price-to-earnings (P/E) ratio is just eight.

As far as risks go, there are a few to keep in mind. Yü operates in a competitive market. Meanwhile, it has no control over energy prices.

However, I think the stock is worth a look at the moment. Given the low valuation and rising dividend yield, there is a lot to like.

Edward Sheldon has no position in Yü Group.