Best shares to buy now: 1 FTSE AIM stock I would buy with £500

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My best shares to buy now are spread among many industries and across a number of markets. One FTSE AIM stock I like is Anglo Asian Mining (LSE:AAZ).

FTSE AIM opportunity

Anglo Asian Mining is a gold, copper, and silver explorer and producer that operates in Azerbaijan. It is a minnow in a lucrative and saturated sector. It possesses a market cap of approximately £165m.

When the market crash occurred last year, many investors turned towards commodities such as gold, which enjoyed strong performance. Gold was seen as a safe-haven asset to store value.

Anglo was very much a penny stock five years ago and was trading for as low as 9p per share. As I write, I can pick up shares for close to 142p per share. That is an astonishing 3,450% share price increase for the FTSE AIM incumbent.

It is worth noting too, that Anglo has comfortably surpassed its market crash low but has not quite reached its pre-cash highs. Its rise in share price and ability to grow is one of the reasons it is on my FTSE AIM best shares to buy now list.

Why I like Anglo Asian Mining

There are a few reasons I like Anglo. Firstly, it recently regained control of a mineral-rich area that was subject to a political dispute. Anglo announced that the end of a war between Azerbaijan and Armenia had seen one of its lucrative contracts restored. It also recently announced a five-year extension to one of its most lucrative contracts where it mines a lot of its materials.

Next, Anglo has seen year-on-year growth in revenue, profit, and cash reserves. Full-year results announced a few months back also made for positive reading. These results showed record revenues of over $100m as well as cash generation of over $38m which meant Anglo was debt free. These aspects play an important part in me selecting my best shares to buy now. I refer to debt levels, growth, and share price activity to name a few criteria.

Anglo has continued to pay dividends, which is another one of my key criteria. Many other FTSE firms have cancelled dividends to conserve cash. Anglo announced a special dividend at the end of January 2021 based on a record 2020. It already paid a dividend back in November 2020 too.

Best shares to buy now carry risks too

Firstly, Anglo is a rather small player. Although its rise to date is commendable, it can be out muscled and outmanoeuvred by larger firms out there. Secondly, it operates in a politically volatile part of the world. This could negatively affect operations and its balance sheet if things take a turn for the worse. Lastly, gold as a commodity long-term could be quite risky. Low interest rates have recently been helping its performance. A stock market rally could see investors become less risk averse and this could detract from gold’s standing as a safe-haven asset.

There is a lot to like about Anglo. It is priced well in my opinion, it is debt-free, and reported record revenues and cash generation for its last full-year period. I expect its growth journey to continue. Looking at the best shares to buy now if I had a spare £500 ripe for investment, Anglo would be a strong contender.

The post Best shares to buy now: 1 FTSE AIM stock I would buy with £500 appeared first on The Motley Fool UK.

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Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021

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