This AIM stock could rise 51%, according to a City broker

A lot of decent AIM stocks have been crushed in the last few years. So this area of the London Stock Exchange could potentially throw up some lucrative investment opportunities in the years ahead. One stock I like the look of right now is Gamma Communications (LSE: GAMA). According to analysts at Deutsche Bank, it has the potential to rise more than 50% from here. For quite a while now, I’ve thought this stock is undervalued. A provider of business communication solutions, Gamma is a high-quality company. Not only does it have a great track record when it comes to growth (five-year sales growth of 183%) but it also has a high return on capital employed (meaning it’s very profitable). Yet today, its forward-looking price-to-earnings (P/E) ratio is just 18, which is a relatively low earnings multiple for a high-quality tech company. I think the company deserves a higher valuation. And it seems analysts at Deutsche Bank agree with me. On 3 May, they initiated coverage of the stock with a Buy rating and a 2,250p price target. That’s roughly 51% higher than the current share price. If the analysts are right, a £2,000 investment in Gamma shares could soon...

Read more