Best AIM stocks to consider buying in October

We asked our freelance writers to share their top ideas for stocks listed on the Alternative Investment Market (AIM) with investors — here’s what they said for October!

[Just beginning your investing journey? Check out our guide on how to start investing in the UK.]

Creo Medical   

What it does: Creo Medical is a medical devices company that makes instruments used in endoscopic surgery.    

By Ben McPoland. I think shares of Creo Medical (LSE: CREO) look interesting after falling 42% this year. The innovative small-cap company manufactures devices that enable minimally invasive surgical procedures.

Last year, it more than doubled its user base and analysts expect revenue to jump 28% this year to around £39.6m. Its recently launched Speedboat UltraSlim, a device compatible with most endoscopes, is expected to drive further sales momentum in the years ahead. 

On 18 September, Creo announced the sale of 51% of its European business to China’s Micro-Tech (a leading endoscopic instrument company). If approved, this will net the firm approximately €36.7m, which it will use to fund its growth.

Creo says this deal will “support our continued commercial growth in the [Asia Pacific] region through product registration and co-branding in China.” Opening up opportunities in the massive Chinese healthcare market could prove to be very lucrative.

The main danger here is that the company’s still in growth mode and not yet profitable. It has a cash-flow break-even target for 2025, but the lack of earnings still heightens risk. 

Nevertheless, with the market cap now at £95m (as I write), the stock looks attractive to me given the growth potential.

Ben McPoland owns shares in Creo Medical.

hVIVO

What it does: Specialist contract research organisation (CRO) focused on human medical trials of vaccines and antivirals.

By Mark David Hartley. hVIVO (LSE: HVO) is a clinical research organisation that serves biopharma companies. It recruits volunteers for clinical trials through its FluCamp database, which boasts over 320,000 participants. It can be a risky business, as clinical trials face the threat of medical complications or even fatalities. This could cause reputational and financial damage to the company. 

The company’s latest results revealed a 30% year-on-year increase in revenue and 67% EBITDA growth, translating to a 24.5% margin. Basic adjusted earnings per share also saw a 30% increase. However, with a price-to-sales (P/S) ratio of 3, revenue is lagging the share price. 

Still, its balance sheet looks solid, with cash up from £31.3m to £37.1m in H1. Looking ahead, management anticipates an 11% increase in full-year revenue with a projection of at least £100m in revenue by 2028. That’s a compound annual growth rate of about 14%.

Mark David Hartley does not own shares in hVIVO.

Serica Energy

What it does: Serica is one of the top 10 oil and gas producers in the UK North Sea, with an output of more than 40,000 barrels per day.

By Roland Head. Shares in North Sea oil and gas producers have been hammered by the falling oil price and uncertainty over government energy policy. Serica Energy (LSE: SQZ) is no exception.

The company’s share price has fallen by 40% so far this year. The shares now trade on just three times forecast earnings, with an 18% dividend yield.

The Autumn Budget on 30 October may provide some welcome clarity. In the meantime, we know that Serica had $131m of net cash at the end of June.

Serica’s projections suggest that the company could generate another $500m of surplus cash from its current production by the end of 2027.

My main worry is that management may blow some of the group’s cash pile on a misguided foreign acquisition.

However, the company recently confirmed its support for the dividend, declaring an unchanged interim payout. I think the shares just look too cheap right now.

Roland Head owns shares in Serica Energy.

Warpaint

What it does: Warpaint sells colour cosmetics under its own brands, W7 and Technic. It sells through major retailers and via its own website.

By Harshil Patel. Warpaint (LSE:W7L) is going from strength to strength. Not only are sales and profits rising, but its profit margin is too.

Achieving this hat-trick is impressive and it’s what makes this AIM stock stand out from the crowd.

Its half-year pre-tax profit jumped by 76% from £6.2m to £10.9m. The company’s sales are weighted towards the second half of the year due to its gifting attributes. So, I’d expect more growth to come.

There are plenty of opportunities, both from existing retailers and through new major shops which it is currently in discussion with.

Warpaint offers many of the qualities that I look for in the best shares. Namely, it offers a return on capital employed of 42%, over 20% operating margin and a solid balance sheet.

There is competition in this space, but it looks like it’s taking market share from rivals.

I wrote about this Aim stock a year ago, and although its share price has doubled since, I still like it today.

Harshil Patel owns shares in Warpaint.

YouGov

What it does: YouGov is a British internet-based market research and data analytics firm with global operations.

By Muhammad Cheema. YouGov’s (LSE:YOU) 2024 has been torrid with its shares falling by almost 62%. Investors were particularly spooked by a profit warning in June, which caused a one-day drop of 46%. Debt of £214m on its balance sheet is also risky and doesn’t ease concerns.

However, I believe this has been blown way out of proportion. On its later trading update on 6 August, it guided for revenue of £327-330m and operating profit of £43-46m. For context, FY23 revenue and operating profit were £258m and £44m, respectively.

This doesn’t warrant the share price fall in my opinion and presents a potential buying opportunity for investors to consider. Revenue growth remains strong and even though earnings are broadly in line with last year, historically the company has a strong track record of increasing this. This might just be a blip in performance, especially as the firm is in a great position to capitalise on the rise of AI.

Muhammad Cheema does not own shares in YouGov.