Octopus Investments, an investment manager on a mission to invest in the people, ideas and industries that will change the world, today releases its inaugural Growth Barometer (the Barometer). In celebration of AIM’s 30th year, the Barometer aims to highlight businesses driving the future of UK equity growth beyond the mainstream markets.
The Barometer shows that AIM companies continue to deliver exceptional growth, despite recent share price weakness across much of the index. Since the market peak in late 2021, profits and earnings have progressed by nearly 60% on the FTSE AIM50 index. Despite this, the index has fallen in value by 37% resulting in a price to earning valuation multiple decline of over 60% during the period.
The Barometer takes this to mean that a significant store of value has emerged during the recent interest rate cycle, potentially providing suitable investors with one of the most compelling buying opportunities of AIM listed companies since the Financial Crisis in 2008.
The Barometer highlights that AIM is expected to deliver stronger earnings per share (EPS) growth than the leading global growth index, the Nasdaq Composite Index, and far in excess of UK blue-chips as represented by the FTSE 100. Despite this superior growth outlook, AIM continues to trade at a significant valuation discount.
The prospective price-to-earnings (P/E) multiple for AIM is currently only 12.18x, less than half the multiple currently being attributed to Nasdaq on 26.34x and comparable to the FTSE 100 index on 11.9x. This indicates that investors are paying more for earnings on the Nasdaq, even though some of those companies may not grow as quickly.
Moreover, on an EV/EBITDA basis, again AIM stands out as cheap. Nasdaq is trading on 16.5x, the FTSE 100 is on 8.00x, whilst the FTSE AIM All Share is on only 6.08x.
An analysis of the ten largest AIM-listed companies in 2025 reveals not only strong earnings growth, but also AIM’s ability to support companies spanning sectors as diverse as leisure & travel, health technology, mining, and data analytics. Leading the list by profitability is Jet2 plc, the well-established international airline business with a market capitalisation of almost £4billion.
Looking more broadly across the index, an analysis of AIM’s sector composition shows where profits are forecast to be generated, and as indicated by the Barometer, non-energy minerals is leading the way. This sector, which includes precious metals and construction materials, is expected to generate the largest share of total AIM profits this year at 20.47%.
The non-energy minerals sector is also expected to deliver the strongest Compound Annual Growth Rate (CAGR) of all the sectors on AIM, with a two-year CAGR to 2026 of 45%. Other sectors following behind include health technology, with an expected CAGR of 32%, and consumer durables, with an expected CAGR of around 25%.
The Barometer has also revealed its ‘shining stars’, two UK AIM-listed stocks that are delivering solid historic growth and have exciting potential:
- Advanced Medial Solutions: A world leader in innovative tissue-healing technologies, producing a wide range of surgical products including tissue adhesives, sutures and internal sealants.
- Animalcare: a York headquartered business providing veterinary pharmaceuticals and services focused on improving animal health and well-being across the companion animal, production animal and equine markets
The Barometer does note that in recent years, as financial markets adapted to the higher interest rate environment, smaller companies have suffered a period of negative capital flows, and as a result, underperformance. This has inevitably impacted AIM, which has also experienced structural issues, such as the cost creep associated with being a publicly listed company and changes to Business Relief (one of the tax reliefs extended to investors in AIM that will be halved from April 2026).
However, with interest rates expected to continue to be cut globally over the coming periods, and if the Government were to make a stronger statement of support for publicly quoted companies, the Barometer argues that it would be reasonable to expect sentiment, and capital flows, to improve for smaller companies, benefitting AIM.
Richard Power, Head of Quoted Companies at Octopus Investments, comments:
“The share prices companies listed on AIM have suffered a difficult few years driven by negative fund flows. What this has masked is the exceptional earnings growth that AIM companies have continued to deliver, which this Growth Barometer has demonstrated.
“Smaller companies can adapt more quickly to changing market dynamics, and AIM continues to deliver superior earnings growth compared to Nasdaq. Once sentiment towards the UK improves, we believe this progress will be reflected in share prices offering investors the potential for significant upside from today’s depressed market levels.’’
