Small-cap growth stocks and quality checks

Seven Aim-listed companies pass all our quality tests this month, but it would be foolhardy to slap a quality shares label on them on that basis alone. Actually, it’s more sensible to make a cynical interpretation of the results and work backwards asking which characteristics of these companies enable them to do well. Equally importantly, we’re not assuming these are bad companies either. It’s just about using the screen as a springboard for the next questions to ask. 

System1 Group (SYS1) is a company with a niche business model in an industry facing structural challenges and disruption. This makes it both an exciting prospect and a risky one. The business model is using precision data to help advertisers and media professionals make smart creative and campaign management decisions. Operationally, there were signs of encouragement when the company reported interim figures for the period through to September 2024, with client acquisition and retention both looking positive.  That feeds into a high-level narrative that agile and technologically innovative players can still thrive in an industry facing many structural challenges in the era of Big Data and AI.