Stockopedia’s ‘High Flyers’ are the stock market superstars. These companies tend to be the ones that fund managers jostle and barter over. They are high quality, growing stocks with a history of beating estimates - and Impax Asset Management is one of them.
Impax Asset Management is a small cap stock in the Investment Management & Fund Operators industry. When we analyse Impax Asset Management from a factor perspective, we find that it has a Quality Rank of 90, a Momentum Rank of 75, but a Value Rank of only 24. This is the classic factor profile of a High Flyer.
A combination of high quality, high momentum and low value is great when earnings go up but a bad place to be when things go wrong. The higher they rise the harder they fall, after all - and few stocks stay High Flyers for long. Mean reversion is a very real thing and it works like gravity on growth.
What kind of High Flying stock is Impax?
So, High Flyers tend to be riskier and more volatile than the market average. But is this true of Impax Asset Management?
We can find out quickly by applying Stockopedia’s RiskRatings system, which splits the stock market into five buckets according to stock price volatility. The five classifications (from least to most volatile) are:
- Conservative (10% of the market)
- Balanced (15% of the market)
- Adventurous (20% of the market)
- Speculative (25% of the market)
- Highly Speculative (30% of the market)
Impax Asset Management is a speculative stock. This means that the group is in the riskier half of the market. The fact that the group is on the smaller side, with a market cap of £306.5m, might further add to this volatility. That said, Impax Asset Management has a positive one-year relative strength of 44.5%, meaning it has outperformed the market.
Not only that, but we can see from Impax Asset Management’s above average five-year return on capital employed figure of 17.6% that the group has been highly profitable over multiple years. This indicates that Impax Asset Management might be able to back up its favourable factor exposures and volatility characteristics with some kind of economic moat.
Disclaimer: These articles are provided for information purposes only. The content is not intended to be a personal recommendation. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. The author has no position in the stocks mentioned, unless otherwise stated.