AIM shares: 3 stocks to beat the market in 2023

London’s Alternative Investment Market (AIM) is where many ‘under the radar’ stocks are hiding with the potential to beat the stock market. So here are three AIM stocks I’ve put on my watchlist to do in 2023.

1. Go2

Like the rest of the travel industry, shares of Jet2 (LSE:JET2) has performed well recently. The stock is up 30% so far this year and for good reason too. The latest trading update is an important event. That’s because it’s the first time FTSE-registered airlines to see their load factors finally exceed pre-pandemic levels.

In addition, low-cost airlines also reported sales of packaged holidays and advanced bookings. Most importantly, the AIM stalwart revealed that it now expects profits to beat analysts’ estimates of £317m. The company now estimates pre-tax profits to come in at between £370m and £385m. Couple that with a ridiculous balance sheet and Jet2 stock certainly looks profitable for my portfolio.

To make it even sweeter, the low-cost carriers also have fantastic value multiples. So, it’s not surprising to see Barclays The stock is rated ‘buy’ with a price target of £13.50. While this only gives up 10% of the current level, I believe the potential to show AIM more. Therefore, buying at this level will still give me a good chance to beat it FTSE 100which yields an average of 7% per year.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	2.0	1.8
Price-to-sales ratio (P/S).	0.6	0.9
Price-to-Earnings (P/E) ratio.	15.9	11.5
Price-to-sales ratio (P/S).	0.5	0.9
Price-to-earnings (P/E) ratio.	10.8	27.3

2. On the Beach

On the Beach (LSE:OTB) has also been doing well. The share of the online beach holiday retailer has been taken by an impressive 85% from the October low.

AIM companies are bringing strong momentum into 2023 following their latest Q1 update, which saw their share price rise by 10%. The business recorded higher orders during its quietest quarter of the year, along with strong forward orders and higher transactional value (TTV).

What’s more, the group is seeing growth in premium, long-distance, and B2B offerings, which tend to be higher-margin products. As a result, I expect growth in these areas to lead to margin expansion, which should reduce higher multiples.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	1.8	1.8
Price-to-sales ratio (P/S).	2.0	0.9
Price-to-Earnings (P/E) ratio.	181.1	11.5
Price-to-sales ratio (P/S).	1.7	0.9
Price-to-earnings (P/E) ratio.	19.8	27.3

Either way, I believe travel agency stocks have the potential to beat the market because of their strong balance sheets and travel demand. After all, On the ground rate is ‘buy’ with a price target of £2.60, presenting an increase of 50% from the current level.

3. Sosander

Another thing about AIM that I like is the fashion house Sosander (LSE: SOS). The clothing company’s stock has risen 30% this year thanks to mega deals Sainsbury’s.

The fashion brand recently penned an agreement with the UK’s second largest retailer, signing a wholesale agreement to sell its products. Although the initial rollout will be slow, the upside potential is definitely something to be realized. This is especially so if the clothes start to hit the shelves of select stores later this year. A higher sales figure would then lower the stock’s current multiple to a more reasonable level.

Metric	Multiples of value	Industry average
Price-to-book (P/B) ratio.	5.4	1.5
Price-to-sales ratio (P/S).	1.5	0.7
Price-to-earnings (P/E) ratio.	58.0	18.3
Price-to-sales ratio (P/S).	1.2	0.7
Price-to-earnings (P/E) ratio.	31.2	18.1

Combine the above with strong financials, and it’s no wonder Sosander shares have an average price target of 35p. With a 32% rise, it certainly has the potential to beat the market as well.