Best AIM stocks to buy in July

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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 July!

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Ashtead Technology Holdings

What it does: Ashtead Technology is a subsea equipment rental company operating globally in both offshore wind and oil and gas markets.

By Ben McPoland. Given its double-digit dip since May, Ashtead Technology (LSE: AT.) stock now looks attractive to me. In 2023, the firm’s revenue surged 51% year on year to £110m, with growth across all its geographic markets. Adjusted earnings per share (EPS) rocketed 73% to 33.4p.

It also acquired ACE Winches in November, bolstering its vast offerings of offshore rental equipment. That said, acquisitions have increased its net debt over the last few years, which is worth keeping an eye on.

As I write, the stock’s forward price-to-earnings (P/E) ratio is about 19. I think that looks attractive, especially as The City sees the company’s revenue nearly doubling to £200m by the end of 2026.

Looking further ahead, the firm appears to be in the sweet spot. Not only are companies increasingly opting to rent equipment to lower capital expenditure, but the energy transition means both the decommissioning of oil and gas infrastructure and offshore wind markets are tipped for strong future growth.

Ben McPoland owns shares of Ashtead Technology.

James Halstead

What it does: James Halstead is a manufacturer and international distributor of floor coverings

By Paul Summers. The AIM isn’t exactly overburdened with high-quality companies but there are a few diamonds in the rough. One example, in my view, is floor covering specialist James Halstead (LSE: JHD).

Having generated consistently excellent returns on the money it puts to work, this firm has delivered great gains for long-term holders.

That said, the last two years have been tough for the share price as inflationary pressures have kicked in.

But I think we’re past the worst. Supporting this, the company announced in March that pre-tax profit had climbed 18% to £27.4m for the second half of 2023.

At a pretty expensive valuation of 19 times forecast FY25 earnings, things could get nasty if I’m wrong.

Then again, a strong balance sheet suggests Halstead should be able to weather any further storms. There’s a chunky 4.5% dividend yield too.

I reckon this is one to consider tucking away.

Paul Summers has no position in James Halstead

Volex

What it does: Volex is a manufacturing company that specialises in power cords and data transmission cables. It serves customers in the data centre, consumer electronics, healthcare, and electric vehicle (EV) markets.

By Edward Sheldon, CFA. One investment theme I’m really excited about right now is the global data centre buildout. Across the world, large technology companies are building data centres everywhere to handle the huge amount of data being generated today (and use it for things like artificial intelligence).

Volex (LSE: VLX) strikes me as a great way to play this theme. A manufacturing company, it generates a decent chunk of its revenues from the production of power cords and data transmission cables for data centres.

And sales from this side of the business are growing fast. In H1 FY2024, for example, revenues in its ‘Complex Industrial Technology’ division grew by a huge 30.1% on an organic basis to $101m (about 25% of total revenues).

It’s worth noting that sales in its other divisions have not been growing as quickly. In H1 FY2024, revenues from its EV division actually declined. Low or negative growth from these divisions could be a risk going forward.

With the stock trading at a low earnings multiple, however, I like the risk/reward setup.

Edward Sheldon owns shares in Volex

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The Motley Fool UK has recommended Ashtead Technology Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.