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This biotech stock is already worth £1.7bn — is it still a buy?

If I told you there were around 750,000 life science researchers in the world today, would you be surprised? I certainly was. That’s an awful lot of scientists messing around with antibodies, proteins, and other such biotech stuff. But trust me, that’s a good thing.

Cure for cancer

It gives me a warm feeling knowing that at least some of our best minds are still working hard trying to discover cures for illnesses such as cancer and Alzheimer’s, rather than seemingly more glamorous pursuits, such as figuring out whether dandelions would survive on Jupiter. But I digress.

For many of these scientists antibodies are essential in carrying out their important research. But how do they acquire these antibodies? I certainly don’t remember seeing them in the freezer section at Tesco. And you can’t buy them online, can you? Well, actually, you can.

The Amazon of antibodies

There is a British company (pause for British pride), that not only produces high-quality antibodies and other life science research tools, but sells them online to researchers around the globe. That company is Abcam (LSE: ABC), and it has already been dubbed ‘the Amazon of antibodies’. How cool is that?

Abcam’s products are used by two-thirds of the world’s life science researchers, and this figure will no doubt increase while the company continues to grow at a blistering pace. The Cambridge-based biotech firm is undoubtedly a great British success story, and is already the second largest company listed on the Alternative Investment Market (AIM), after ASOS. But with a market value of over £1.7bn, is there still room for further growth?

Buy the dips

Earlier this month Abcam announced a strong set of interim results for the first six months of FY 2017, with total revenues climbing to £102.5m, a massive 30.4% improvement on the same period last year. For catalogue products, all geographic areas and main product categories performed at levels above underlying market growth rates, but China continues to be its fastest growing major market.

Surely a fast-growing biotech firm such as Abcam comes with a hefty price tag? With a premium P/E rating of 36, the answer is, unfortunately, yes . But don’t let that stop you from putting Abcam on your watchlist. After doubling its share price over the past year, I’m expecting a sharp retracement sometime soon. So be ready to buy on the dips.

Plenty of upside

Another AIM-listed company that perhaps doesn’t get the recognition it deserves is Breedon Group (LSE: BREE). The Derby-based group announced its 2016 results last week, revealing a 42.8% surge in revenues to £454.7m, with pre-tax profits climbing 49.5% to £46.8m.

I think that despite the Brexit result, the need for investment in housing and infrastructure remains, while the Chancellor’s commitment to housing should also help support the sector over the longer term. Breedon trades on a P/E ratio of 21 for the current year , dropping to 18 for 2018, which is much lower than its five-year average of 28. And with strong double-digit growth forecast to continue I can see plenty of upside ahead.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.