Pick of AIM by James Crux

First up on my radar this issue is high-flying Judges Scientific, the producer of scientific instruments that do everything from measuring the reaction of materials to fire, to testing the properties of fibre-optic networks.

Judges, bossed by CEO David Cicurel, recently flagged up the fact that annual earnings for 2010 are likely to beat forecasts, having enjoyed strong trading in its core business and at Sircal, the maker of rare gas purifiers used in metals analysis acquired in March.

Flourishing in resilient markets with exports driving growth across all divisions, Judges is establishing an excellent track record, having posted record half-year results to June, with sales advancing 70 per cent to £7.6 million and earnings surging 45 per cent north to 22.5p.

Following Judge’s latest upbeat market missive, Matthew Davis at broker WH Ireland has upgraded his 2010 profit and earnings estimates from £2.3 million to £2.6 million and from 35.4p to 39.4p respectively, upping his price target from 350p to 420p a share. For 2011, he sees profits of £2.72 million and 41.4p of earnings.

Judges’ shares are on something of a roll, having raced up from a 52-week trough of 112.5p to touch 446.5p, before a slight pullback to 412.5p. Surprisingly, they still only sell for ten times next year’s earnings and I urge readers to fill their boots.

Andor’s profitable growth picture
Another stellar price performer is Queen’s University Belfast spin-out Andor Technology, a manufacturer of high-performance digital cameras for academic and industrial clients, whose merits I highlighted (at 249.5p a share) in Company Watch over the summer.

Andor, whose fortunes are overseen by science whiz Conor Walsh, CEO, has already cheered investors with news of stronger than forecast trading in the second half of the year to September. This augurs well for the full-year numbers, which are expected imminently and should show boosts from currency gains and new products launched. Andor is also making positive progress in the integration of recent acquisitions.

Shares in Andor, which grew sales 24 per cent to £20 million and pre-tax profits to from £1.7 million to £3.3 million in the half to March, have surged from a 52-week low of 131.5p to 380.5p, at which they trade on 20 times forecast earnings of 18.77p.

That rating does look a bit punchy, so book a bit of profit for the sake of prudence, but be sure to stay meaningfully exposed for growth.

Nanoco – meeting milestones
Nanoco, a leading maker of commercial quantities of quantum dots – nano-sized semiconductor particles that are free of heavy metals and have uses in applications ranging from lighting to biological imaging and solar cells – is also on my watch list.

The Manchester-based concern, which debuted on AIM in May 2009, is transitioning from lab-scale production towards volume production of quantum dots, which deliver reduced power consumption and superior performance to OEM partners.

From what I can glean, Nanoco is delivering on promises, having achieved a key milestone in its solar photovoltaic agreement with Tokyo Electron, the Japanese semiconductor production equipment supplier, providing further endorsement of its technology in the solar sector.

During the year to July, Nanoco inked joint development deals with a major Japanese electronics firm for LED backlighting in TVs, while milestone receipts included a lucrative US$2 million payment from a Japanese LED producer.

Though losses widened to £1.37 million (2009: £780,000) last year and profitability looks some way off, revenues rose from £1.99 million to £2.94 million and Nanoco closed the year with a reassuring £5.68 million cash in its coffers. The shares, up from a 66.5p 52-week low at 105p, are heading in only one direction and are well worth a considered punt.