Best Small-Cap AIM Stocks to buy for 2025

The Alternative Investment Market (AIM) hosts junior companies on the London Stock Exchange. Its main function is to provide a listing before companies grow and migrate to a main listing. In this guide, we cover how to buy AIM shares, what the AIM market is and some of the best AIM shares to follow.

Small-cap AIM stocks tend to be higher up on the risk spectrum. But they can be worth including in a Stocks or Shares ISA or SIPP due to their potential for outsized returns. Looking for the best AIM stocks to buy for 2025? Here are three shares to take a look at.

Cerillion

Cerillion (CER:LON) is a technology company that specialises in back-office software for telecoms companies. It has been one of the AIM’s best performers in recent years, delivering a gain of nearly 600% since the start of 2020.

This company is benefitting as telcos across the world invest in software to increase efficiency. Over the last five financial years, its revenue has climbed from £18.8 million to £43.8 million. Looking ahead, further top-line expansion could push the share price higher. For the year ending 30 September 2025, the consensus revenue forecast is £49.5 million.

Now, one downside to this AIM stock is that its valuation is relatively high. Currently, its forward-looking price-to-earnings (P/E) ratio is about 31. I believe this valuation is justified given the software company’s strong growth track record. But it does add some risk to the investment case – if growth slows down the stock could be volatile.

Edward Sheldon owns shares in Cerillion

Yü Group

If one is looking for a cheap AIM stock to buy for 2025, Yü (YU:LON) could be worth checking out. It’s an independent supplier of gas and electricity to businesses across the UK, and a smart metre installer.

This company has been growing at a fast pace recently. For the first half of 2024, Yü’s revenues climbed 60% to £313 million while earnings per share (EPS) increased 52% to 88p.

But this business momentum doesn’t seem to be reflected in its valuation. Currently, the stock trades on a forward-looking P/E ratio of just nine.

The low valuation isn’t the only attraction here, however. Another is the company’s rapidly-growing dividend. In its interim 2024 results, Yü increased its dividend by 533% to 19p. Currently, the yield is around 3.5% but if Yü continues to increase its payout aggressively, the stock could become a cash cow.

It’s worth pointing out that Yü operates in a competitive market and has no control over energy prices. So, there’s no guarantee that it will continue to have success. I like the risk/reward setup at current levels though.

• Do you prefer larger-cap stocks? See our picks of the best FTSE 100 stocks.

hVIVO

Finally, I think out of favour hVIVO (HVO:LON) is worth considering as a contrarian play. It’s a small company in the healthcare sector that offers services for clinical trials and lab testing (and works with four of the top 10 pharma companies globally).

This AIM stock has come under pressure recently due to the fact that Robert Kennedy Jr has been selected to lead the US Department of Health and Human Services. He’s a notorious vaccine sceptic and there are fears that major pharma companies could face a hostile regulatory/funding environment while he’s around.

I think the fears are probably overblown though. Realistically, pharma companies are likely to continue developing vaccines and drugs, and they will require clinical trial services such as those offered by hVIVO.

After its recent share price fall, this stock looks cheap. Currently, the forward-looking P/E ratio is just 11. Given that the company has just opened a new state-of-the-art facility in Canary Wharf and is targeting revenues of £100 million by 2028 (versus a forecast of £62.5 million for 2024), I see a lot of value at that multiple. Taking a medium to long-term view, I think this small-cap stock has considerable potential.

What is the AIM stock market?

AIM was set up in 1995 to promote investments in risky corporate ventures. Because of its less onerous listing requirements, many new startups choose to list there. Liquidity has grown as AIM shares can be included in stocks and shares ISAs, making them attractive tax-wise.

• Related guide: Compare the best stocks and shares ISA accounts

According to the latest statistics (December 2024) from the FTSE AIM All-Share Index, AIM currently has 610 companies (down from a peak of 1,694 in 2007) with an overall market capitalisation of £68 billion (down from £104 billion in March 2019). Despite the decline in the number of companies and overall value, it remains a stock market worth considering for investment.

How to buy AIM shares

To buy AIM shares you need a stock broker that provides access to smaller-cap shares. These are what we think are some of the best stock brokers for investing in AIM stocks and why:

• Hargreaves Lansdown – excellent market access, research pricing data and AIM company reports
• Interactive Investor – provide a fixed-fee investing account and access to the AIM market
• AJ Bell – a low-cost investment platform for investing in AIM shares
• IG – investing, CFD trading and financial spread betting on AIM stocks
• Spreadex – a smaller derivatives broker with great customer service for working orders in between the bid/offer spread (for more advanced larger traders).

Related guide: How to buy shares in any company from any stock market around the world.