Investing in smaller, lesser-known firms listed on the London Stock Exchange offers a path to potentially high returns, but the sheer volume of options can make selection difficult. Midas has selected six such stocks that could provide significant gains, including three that have already delivered substantial growth since their initial recommendation. The following companies have demonstrated strong performance, with Airtel Africa up nearly sixfold, Australia-based Empire Metals soaring more than 300 per cent, and Greenland-based Amaroq more than doubling in four years.
The summer box office saw a return to pre-pandemic levels, showing consumer confidence is stabilizing.
Airtel Africa: Mobile Money on the Rise
Airtel Africa operates across 14 African countries, providing mobile phone and money transfer services. The company targets a demographic where only a third of the population has a bank account and smartphone ownership is low. This gap creates a clear opportunity for growth. Airtel Money allows users to transfer funds and pay for goods using basic mobile phones, processing nearly £150 billion in transactions last year alone. The company owns 79 per cent of this division and plans to float it on the London Stock Exchange later this year, either keeping the entire stake or returning the proceeds to shareholders.
Share ownership is heavily concentrated, with the Bharti Mittal family owning almost 80 per cent. This concentration of wealth usually suggests a supportive environment for dividend increases. The shares were floated in 2019 at 80p but fell during the Covid pandemic, before being recommended by Midas in 2020 at 57p. They now trade at £3.32. While investing in Africa carries risks, the company’s track record and the upcoming listing of its mobile money arm offer a compelling case for investors.
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Amaroq: Mining Greenland’s Resources
Amaroq, an AIM-listed mining firm, focuses on the extraction of gold and strategic minerals in Greenland. The company moved from the junior market to the main market last month. Its flagship asset, the Nalunaq gold mine, is already in production and is expected to produce up to 35,000 troy ounces of gold this year. The ore grade is high, delivering nearly 20 grams per tonne, which is exceptional for the industry. The company also seeks to restart the Black Angel mine, a site known for zinc, lead, silver, and the strategic minerals germanium and gallium.
Dynamic chief executive Eldur Olafsson aims to bring the nearby Nanoq deposit into play, which could boost production by at least 20 per cent. The interim results have been stellar, with brokers predicting profits of £31 million this year. Amaroq shares have risen from 44p to £1.04 since the 2022 recommendation. The company’s success highlights how foreign investors can access resource-rich territories through London listings, a pattern that mirrors the way global commodity markets often reward those who can handle complex regulatory environments.
Prospex Energy: Home-Grown Power Sources
Energy security has become a pressing issue following geopolitical events in Ukraine and the Middle East. Prospex Energy, traded on AIM, is positioned to benefit from this shift. The company owns oil and gas projects in Italy, Spain, and Poland, with varying stages of development. Italy’s Po Valley is home to the most profitable asset, where one well is operational and plans exist to add four more. Prospex owns nearly 40 per cent of the site but may bring in outside partners for future development.
Under new chief executive Tom Reynolds, the company has shifted its focus from acquisition to asset improvement and shareholder returns. The Spain assets, particularly the one near Seville, are in production and hoping for expansion. The Poland assets are newer, with two licences acquired this year that could move into production soon. Despite the challenges of operating in multiple jurisdictions, Prospex is valued at little more than £16 million, yet its assets could be worth over £200 million if the plans succeed.
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Empire Metals: Titanium in Western Australia
Empire Metals is an AIM-traded company operating in Western Australia with a focus on titanium. The global market for titanium is valued at around £15 billion a year and is expected to grow by 20 per cent over the next five years. Premium titanium is in short supply, with China controlling much of the market. Empire Metals has identified the world’s largest resource, containing eight billion tons of ore with almost 350 million tons of high-grade titanium dioxide. This raw material is superior to low-grade ore, meaning processing will be cleaner and less expensive.
The company is sitting on a 400-square-mile site and is making progress on development. Shares have already jumped from 9.5p to 42p since January 2024. The interim results confirmed progress on every front, and the group plans to list in Australia while retaining its London base. Existing shareholders might want to take profits, but brokers suggest the stock is worth close to 80p, indicating long-term value for new and current holders.
Nippon Active Value Fund: Shaking Up Japan
Japan is home to almost 4,000 listed companies, more than the New York Stock Exchange. However, many of these firms are poorly managed or stagnate due to slow regulatory changes. Nippon Active Value Fund (NAVF) was created to identify these under-achievers and force change. The fund invests in small and medium-sized companies on the Nikkei Exchange, including 29 firms ranging from chocolate-makers to nuclear plant suppliers.
NAVF works by hunting in a pack with American funds, Dalton and NAVF Select, to build large stakes and exert influence. The strategy relies on shaking up boardrooms and forcing management to focus on shareholder value. A classic example is Fuji Media, which was selected when the TV group was led by a scandal-plagued executive. After resignations and board changes, the shares rose, and NAVF more than doubled its money. Since launch in 2020, the fund has grown from £103 million to nearly £450 million. With chairman Paul Ffolkes Davis and his team undaunted by the slow pace of change in Japan, NAVF presents an intriguing option for investors seeking exposure to emerging markets.
