- Quality is more nuanced for Aim stocks.
- Some 'boring' compounders can be found.
When assessing the results of our small cap and Aim market screens, investors need to make a slightly different interpretation of the term ‘quality’ compared to when looking at large cap stocks, which ought to be steady compounders with dependable earnings. Smaller businesses can have more volatility in their earnings but still exhibit attractive characteristics.
This month our quality Aim shares screen is topped by Litigation Capital Management (LIT) which, as its name suggests, provides litigation financing. The company has been covered in detail by Simon Thompson, who rated the business a buy on 17 September. This is a business with potential for earnings volatility due to the lumpy nature of legal case realisations, so perhaps doesn’t fit the bill as a quality share in the way the label would be applied to large-cap shares. Still, the expansion into the US litigation market means there exists a pathway for those earnings to grow.
