As regular Share Watch readers will know, we regularly feature companies in this column that are quoted on the AIM market. Over the last 12 months this market has seen a severe drop and, for the best part of 2008, any company on AIM releasing results saw its share price fall regardless of the nature of the results.

Recently a number of companies have reported encouraging results and have seen their share prices move in the right direction – a small but positive sign that confidence is returning to smaller companies. Three companies we have been following for a while are Healthcare Locums, Albemarle & Bond and Hargreaves Services and they have all seen their share prices strengthen lately.

Healthcare Locums is a niche business providing recruitment and workforce solutions into health and care. The business has been built up rapidly and looks set to continue to progress. Financial results have been strong and this has seen strong outperformance by the shares. However, we believe that positive news should continue to flow and there is scope for the company’s valuation to rise further.

Albemarle & Bond should be ideally suited to the current economic climate since it is heavily involved in pawnbroking. While the share price has held up well, the shares look relatively safe when compared with many other AIM companies. The prospective yield is also attractive given the defensive qualities of the share.

Hargreaves Services* is a growing minerals and support services group. The company's share price has outperformed the majority of its AIM peers recently but that is a reflection of the quality of the business rather than a cause for concern.

Investing on AIM has always been high risk mainly due to the size of the companies and possible illiquidity when buying or selling shares but rewards can be significant. Another important benefit of investing in qualifying AIM companies is that after funds have been invested for two years the investments drop out of an estate for inheritance tax purposes. We run a number of bespoke portfolios for this purpose with a remit to preserve capital and so potentially making a 40 per cent saving on a future tax bill.

*Hargreaves Services is considering a move to the main market.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.